I have a bank of hotkeys set up as follows:

Top Left = Melee slot one
Top Right = Melee slot two
Middle Left = an inventory slot (which will at any given time hold either a weapon or an instrument)
Middle Right = an inventory slot (which will at any given time hold either a weapon or an instrument
Bottom Left = an inventory slot containing a backpack which holds instruments and keys
Bottom Right = an assist command hotkey.

Changing from weapons to instruments is straightforward. Assuming both melee slots are filled with weapons, and that only one of the two middle slots have an instrument, then
take weapon from Melee slot one and put it in Middle Left, then pick up instrument and put it in place of the weapon in melee slot two and put that weapon in the Middle Right
slot. To change instruments--right click on backpack in the bottom left slot---backpack opens--change instruments. I think this is more or less how most bards are doing it. I
learned about this from one of the nice folks on this list. I have never dropped an item using this method and I don't really see how I could. Good luck!

Narcissus of Povar
28 Songs--for the third time!

> Message: 17
> Date: Sat, 03 Jul 1999 22:59:45 -0500
> From: Warren Wang <wwang@...>
> Subject: Juggling instruments
>
> So how does everyone else manage to juggling instruments/weapons and
> not drop something on the ground? I just lost a fine steel spear,
> which I spent most of my bank account on (money isn't exactly prolific
> at level 8). Tried to shout and see if someone would return it, but
> alas to no avail. Yes I'm using the inventory-as-hotkey method. I
> have no problem juggling 2-3 songs, but trying to switch instruments
> is a serious PITA with the risk of dropping something.
>
> Warren, aka Erol of Cazic-Thule