>>96342628
The problem with Kobolds is that they're a competitor to Dwarves. They both have the same preference for underground territory, and worse still, Kobolds like Dragons who like to claim Dwarf homes at lairs.

My own assumption would actually be Cloud Giants or Goliaths. Reasons being the following:
>They live atop of mountains, whereas Dwarves live inside of them. This puts them in close proximity to each other, but doesn't have them competing for territory.
>Goliaths are a tall and strong race, but lack industry and knowledge. Dwarven steel would be a great boon to them, and they could keep the mountains clear of threats for the Dwarves.
>Cloud Giants on the other hand are a very studious and intelligent race, and do have a taste for the finer gems and metals, but lack the means to acquire them in the quantities desired. Though not a particularly martial race, they are skillful at enchanting items, which would synergize well with Dwarves, and they could use the armor too.

As for people living INSIDE of of the mountainhomes with the Dwarves, I would actually suggest someone small who won't take up much room. Inchlings, borrowers, that sort of thing.