I inflicted damages like that (~120) as well in melee. I believe that the reason you don't is simply that of missing beneficial spells. I was loaded with them all the time -- bless, haste, heroism, strength, speed, accuracy ... and so on, we all know it. And I'm sure they do add up to the 3-figured numbers easily.Increasing your attributes (like strength, speed, accuracy &c.) won't help you very much at this point (unless you increase them at least by 20 -- and even that will probably yield only a mere +1 to hit or damage, or -1 recovery), but increasing skills (Sword, Spear ...) by 1 directly results in a +1 to one or more of damage/To Hit/minus-Recovery/Armor Class.
As for breaking items: theoretically, I think that Luck somehow makes it slightly better ... but since Luck is an attribute, it's mostly useless to increase it too much. Exactly like all the other attributes. Certainly no Harden Item or anything like that.
