As part of Karlach's romance quest in Baldur's Gate 3, you'll need to find a smith who can remove the inferno engine that's in place of her heart. As time does move forward in Baldur's Gate 3—you're not just having a long rest without meaning—some NPCs will simply move on from where they were, and Dammon the blacksmith is one of them.
In this guide, I'll tell you where to find Dammon in Baldur's Gate 3, though you could be waiting a while to meet him.
Dammon's Act 1 location
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The first place you can find Dammon is early on in Act 1, in Emerald Grove. He's in The Hollow section near the forge. He's in the same area as where you found the strange ox, if you've gotten lost and can't find him.
The best bit of advice I can give you here is to start Wyll's quest to locate Karlach and have a chat with Dammon in the grove. After that, go and recruit Karlach and bring her back to Emerald Grove before you head to the goblin camp.
As time moves on, if you don't recruit Karalach before the tiefling party should you choose to save the grove, you'll miss the chance to talk with him as he'll leave for Baldur's Gate. Also, if you side with Minthara, you'll need to kill Dammon, which isn't exactly ideal.
Speaking with him with Karlach in your party reveals that you need Infernal Iron to repair her engine. If you bring him some, he'll do a little tinkering, then tell you where to meet him later at Baldur's Gate, but you'll meet him sooner than that.
Dammon's Act 2 location
If you saved the grove and had a word with Dammon—it's unclear whether you need to speak to him or not to meet him in Act 2—you'll find him at the Last Light Inn in the Shadowlands. You'll find him near the forge and provided you've got some more Infernal Iron, he'll be able to do further repairs on Karlach.
It's unclear whether he appears in Act 3 or not yet—my guess is if you saved the tieflings then he probably will—or if you can speak to him if you managed to miss him the previous two times, so I'll update this guide when I know more.
