I have refunded an item, but it doesn't show as 'In Stock'

Check that the payment has been made on the refund. This can be done by opening the refund sale, and ensuring that in the 'Refund Payment' box, there is no 'Pay' button showing. If there are still payments to be made on the sale and the balance is not '$0', then the item will not be returned to stock. See below:

Below is what a correctly performed refund should look like after all payments have been allocated and Post End of Day has been performed:

If a refund has 'cancelled' as the status, then it means the refund was cancelled and the original sale remains. This will mean that the item will not be back in stock. In this situation, open the original sale, select refund and process the refund, ensuring you  add the refund payment and select exit sale.