Re: Data storage in MySQL
The first option appears like a normal database design - there is a relation Inventory with tuples (Character, Item). The second option appears like something you'd find on daily ***, though it may be that you're trying to work around SQL's limitations in that you can't have a field in a tuple in a relation which is of a relation type.
But from what you've posted, it doesn't seem any other than a simple one-to-many relation of [ Character ] ---< [ Item ] , and SQL can do that fine.