I can upgrade every weapon except this one. It just doesn't appear on the upgrade list when at the grinding wheel.

Same problem. Doubt itll be a priority when fixing bugs

Skyforge Steel Dagger is already considered fully upgraded in Skyrim. Upgrades won't work on any "Skyforge" weapon.

Just the Dagger? What about other Skyforge Steel weapons?

The other skyforge weapons can be upgraded. I usually on use my skyforge axe and i have it upgraded to legendary. The dagger is the only one I havent been able to upgrade so far. With the nord hero weapons the bow can't be upgraded either.