I want to put looting III on my sword but there's too much stuff on it so it says too expensive. If I remove something will I be able to put looting on it? Or will it still say too expensive? I'm afraid of removing something and still not being able to replace it with what I want.
Yes, but this is because the grindstone technically removes everything all at once to give you back a pristine unenchanted item (with no work penalty). How you combine the books/items will determine how much of a prior-work penalty the item will have, and if it's higher than 39 levels then it becomes too-expensive.