Are you loading a save from before Sherruk was spawned? If not, that is probably your issue. The game only reads from the template file when an object is created. Once an object exists in the game world, data about it is read from your save file.
I would also not recommend editing NPCs with KOTOR Tool. It has a few bugs, one of which which causes all of an NPC's equipment to drop even if it was originally not dropable.