Blacksmiths upgrade and repairs weapons/armor, not merchants. You can also buy items that let you do all of the above from any bonfire, which is awesome.
I found one blacksmith close to the Firelink Shrine bonfire in the area with all the ghosts (he also sells a couple of magic spells) and one just outside the church containing the first bell. If you are where I think you are, when you reach the church you'll have the option of either taking a left and going to the front of the church or going right across a short wooden bridge to reach the side of the church; take this side path and you'll find another pathway leading towards a building containing a bonfire and a blacksmith.
I got past that iron bull, is that around where you are talking about?