There is some confusion about the historical sources and the scriptures regarding the term "Urim and Thummim."
Although D&C 10 and 17 currently mention the Urim and Thummim, the earliest versions of D&C 10 does not. (We don't have a pre-1835 version of D&C 17).
The reference to the Urim and Thummim was added sometime between 1832 and 1835 (when the first edition of the Doctrine and Covenants was published.)
For years, scholars thought it was W.W. Phelps who first applied the term to the interpreters in an 1833 article in the Evening and Morning Star (see below). That was common knowledge until a few years ago, before an earlier 1832 article in the Boston Investigator was discovered that reported a dialog with Mormon missionaries who explained the Urim and Thummim was used to translate the plates (see below). Now we know it was not Phelps who coined the term.
We still don't know when or how the missionaries learned about the Urim and Thummim, but we assume it was Joseph Smith who told them. There is only sketchy information from the early days of the Church, such as brief newspaper articles and later remembrances, so we have multiple working hypotheses.
I think Joseph made the change to D&C 10 to clarify the original revelations; i.e., the original revelation was clear to Joseph, but it would not be clear to others, particularly future readers who would not know about the context. It's easy for common knowledge to become lost when it is not recorded.
This rationale also explains why he and Oliver wrote the eight essays on Church history (published as Letters I - VIII in the 1834-5 Messenger and Advocate). In Letter I, published in October 1834, Oliver declared "Day after day I continued, uninterrupted, to write from his mouth, as he translated, with the Urim and Thummim, or, as the Nephites would have said, “Interpreters,” the history, or record, called “The book of Mormon.” (Messenger and Advocate I.1:14 ¶4)
Parley P. Pratt republished them in the Millennial Star in England. Joseph's brother William republished them in The Prophet, a Mormon newspaper in New York City, in 1844. They were also published as a complete booklet in England that sold thousands of copies.
[Note: many current LDS scholars reject the content of these essays, assuming they know better than Joseph and Oliver did. Anyone can read the essays and make an informed decision about whether to believe the scholars or Joseph and Oliver.]
Some people may think that Moroni never used the term, but that Joseph (or someone else) applied the term "Urim and Thummim" later. It's impossible to know, given the few historical documents we have, but it makes sense to me that Moroni used the term and Joseph related it that way. He didn't use the term in his 1832 history, but that was a brief history anyway.
D&C 10 was originally Chapter IX in the Book of Commandments, as explained in the note in the Joseph Smith Papers:
Revelation, Harmony Township, Susquehanna Co., PA, [ca. Apr. 1829; though parts may date as early as summer 1828]. Featured version, titled “Chapter IX,” typeset [between 1 Nov. and 31 Dec. 1832] for Book of Commandments, 22–27. John Whitmer copied this revelation [ca. Mar. 1831] into Revelation Book 1, but the pages on which the first part of the revelation was copied were removed at some point from that volume and are no longer extant.
The version found in the Book of Commandments and featured below is the earliest complete, extant version.
For the 1835 Doctrine and Covenants, the wording was changed to what it is now in D&C 10: 1-3 (changes in bold):
1 Now, behold, I say unto you, that because you delivered up those writings which you had power given unto you to translate by the means of the Urim and Thummim, into the hands of a wicked man, you have lost them.
2 And you also lost your gift at the same time, and your mind became darkened.
3 Nevertheless, it is now restored unto you again;
This looks like clarification to me.
The earliest extant account of the Urim and Thummim is an 1832 interview in the Boston Investigator (shown below).
Later, in January 1833, W.W. Phelps explained the term to his readers:
The book of Mormon, as a revelation from God, possesses some advantage over the old scripture: it has not been tinctured by the wisdom of man, with here and there an Italic word to supply deficiencies.—It was translated by the gift and power of God, by an unlearned man, through the aid of a pair of Interpreters, or spectacles—(known, perhaps, in ancient days as Teraphim, or Urim and Thummim) and while it unfolds the history of the first inhabitants that settled this continent, it, at the same time, brings a oneness to scripture,
(Evening and Morning Star I.8:58 ¶6)
Question-Where is Joseph Smith now or where is he supposed to be?
Answer-In the state of Ohio-town and county stated, but not taken down.
Q.-By what means did he discover the golden plates and who was with him when he made the discovery.
A.-The golden plates were discovered through the ministration of an angel of the Lord, by Joseph Smith-no one else was with him at the time of the discovery.
Q.-By whom was a fac simile of some part of the language and characters taken, and on what material.
A.-It was taken by Joseph Smith on paper from the original plates themselves.
Q.-By whom was this presented to Dr. Mitchell, and at what period?
A.-By Martin Harris, one of the witnesses who had seen the plates-do not exactly know at what time.
Q.-Is that fac simile, now in being, and if so where is it?
A.-It is, or it was in being-I have seen it.
Q.-In what manner was the interpretation, or translation made known, and by whom was it written?
A.-It was made known by the spirit of the Lord through the medium of the Urim and Thummim; and was written partly by Oliver Cowdery, and partly by Martin Harris.
Q.-What do you mean by Urim and Thummim?
A.-The same as were used by the prophets of old, which were two crystal stones, placed in bows something in the form of spectacles, which were found with the plates.
Q.-What became of the plates after the translation was made?
A.-They were delivered into the hands of the angel of the Lord by whom they were afterwards shown to the three witnesses, who have testified to that effect.
Q.-At what place was the translation made?
A.-Partly at Manchester, Ontario county, N.Y. where the plates were found, and partly on the banks of the Susquehannah river in Pennsylvania. [Note: it's unclear whether the missionaries or the reporter mistakenly said Manchester instead of Fayette.]
Q.-How many were present at the time and who?
A.-Joseph Smith, Oliver Cowdery, Martin Harris-and several others at least part of the time whose names were mentioned but not taken down.
Q.-When were the plates seen by the eight who saw them, and who have testified to that fact; before they were translated, or since?
A.-They were seen at different times while they were in the hands of Joseph Smith and during the time of their translation.
Q.-Did they see the fac simile also, and if so, did they compare the fac simile with the plates to see if they agreed?
A.-They saw the fac simile also, but did not compare it with the plates to see whether it agreed or not.
Q.-Who is Mr. Anthony who saw the fac simile? is he still living, or not?
A.-He was a professor of languages in the city of New-York, but we do not know whether he is now living or not.
Q.-By what means was the spot made known to the men who travelled for the purpose, where the city is to be built?
A.-It was made known by the spirit of the Lord.
Q.-In what way?
A.-In answer to their prayers.
Q.-This is all poetry to me-was there any visible token that unbelievers could have either seen or heard?
A.-I do not know that there was-there probably was not.
Q.-Do the members of the new church, New-Jerusalem Church, Mount Zion, or by whatever name it is called, give up their property to be held in common, or not?
A.-They hold their property in common, and the land is divided out to each one in proportion to what he can cultivate, without any regard to what he put in.
Q.-What is the government of the church, and how are its officers appointed?
A.-The government is of the Lord. They have Elders, Deacons, and Stewards, who receive their appointments from the Lord, and are ordained by the officers for the time being.
Q.-Do the people elect their own officers?
A.-They do not.
Q.-To what sect of Christendom do they approximate the nearest in opinion in regard to a future state of being?
A.-I do not know, for I am not much acquainted with the opinions of other sects; they do not agree however with any.
Q.-Do they hold to a future punishment of the wicked, and if so, do they believe in the doctrine of endless misery?
A.-They hold to the punishment of the wicked in a future state; and those who are finally so unfortunate as to be cast off will be endlessly miserable.
Source: Boston Investigator 2 (August 10, 1832).
Orson Hyde and Samuel H. Smith at Boston in 1832
Orson Hyde was baptized into the Church of Christ on October 2, 1831, the "first Sunday in October." (Manuscript History Book A-1:154, in the handwriting of William W. Phelps, recorded circa January 1843. See History of the Church 1:217; Dean C. Jessee, ed., The Papers of Joseph Smith: Autobiographical and Historical Writings [Salt Lake City: Deseret Book, 1989], 1:364).
In a revelation dated November 1, 1831, given at Hiram, Ohio, the message was:my servant Orson [Hyde] was called by his ordinance to proclaim the everlasting Gospel by the spirit of the living God from people to people & from land to land in the congregations of the wicked in their Synagogues [Churches] reas[o]ning with & expounding all scriptures unto them & behold & lo this is an ensample [example] unto all those who were ordained unto this priesthood whose mission is appointed unto them to go forth & this is the ensample [example] unto them that they shall speak as they are moved upon by the Holy Ghost & whatsoever they shall speak, when moved upon by the Holy Ghost shall be Scripture shall be the will of the Lord shall be the mind of the Lord shall be the word of the Lord shall be the voice of the Lord & the power of God unto Salvation behold this is the promise of the Lord unto you O ye my servants wherefore be of good cheer & do not fear for I the Lord am with you & will stand by you & ye shall bear record of me even Jesus Christ that I am the Son of the living God that I was that I am & that I am to come (Book of Commandments and Revelations, 113, Church History Library, Salt Lake City, Utah; LDS D&C 68:1-6; RLDS D&C 68:1)
At a church conference held at Amherst, Ohio, on January 25, 1832, a revelation stated:And again verily thus saith the Lord let my servent Orson Hyde and my servent Samuel [H. Smith] take their journey into the eastern countries and proclaim the things which I have commanded them and inasmuch as they are faithfull lo I will be with them even unto the end (H. Michael Marquardt, The Joseph Smith Revelations: Text and Commentary [Salt Lake City: Signature Books, 1999], 184; LDS D&C 75:13; RLDS D&C 75:3.
Orson Hyde and Samuel Harrison Smith left Kirtland to go on their mission on February 1, 1832.
The Painesville Telegraph published the following in the issue of March 13, 1832:"They [the Mormons] have made one of their young fanatics [Orson Hyde] believe that he is a descendant of, or belongs to the tribe of Judah, & that it is his duty to repair to Jerusalem, to preach Mormonism, or assist in restoring to Jews their ancient city. He some time since [February 1] took up his march for Boston." (Painesville Telegraph 3 [March 13, 1832]:3).
Orson Hyde and Samuel H. Smith performed baptisms in Boston, Massachusetts in June 1832 and preached in various places in the city. In August the Boston Investigator contained the following notice:NOTICE-It is expected that a meeting will be held at the Julien [Julian] Hall, next Sunday, to commence at 10 o'clock, A. M. by one or two of the Elders of the Church of Christ, from Ohio, who have received a commandment of God to go forth and preach Repentance and faith in the Lord Jesus Christ, declaring to the people that the earth is about to be visited with heavy judgments for the wickedness of its inhabitants. The above meeting will be held gratis. We cheerfully insert the above notice; but lest it should not be fully understood, we observe, the "Elders" above named are professed believers in the "Golden Bible" said to have been found pursuant to revelation by, Joseph Smith.-EDITOR. (Boston Investigator 2 [August 3, 1832]:3, Boston, Massachusetts).The following was recorded in Orson Hyde's Journal for August 5, 1832:5 preached at Julian Hall an infidel establishment and the infidels came out generally a number of hundred and paid good attention told them about the coming forth of the Book &c and also that they must repent or they would perish afternoon met with the Brethren and Sisters at Sister Brewers broke bread &c had a good time Evening went to the infidel meeting upon their invitation, and then spoke had written down I should think about a dozen or more Questions, and he called me to him and asked me to read the questions, I read them he then asked me if I was willing to answer them before the congregation I told him I was, and I did so, he then took up the subject and commenced arguing against it and we prayd that he might be confounded, and really he did not make out much or raise any insurmountable objections he gave us liberty to speak after he got through & we took away his objections and showed the people that he had contradicted his own statement &c came away (Orson Hyde Journal, LDS Church History Library, Salt Lake City, Utah).Samuel H. Smith, the missionary companion of Orson Hyde and one of the eight witnesses of the Book of Mormon, wrote also wrote for August 5th in his journal:5th Sunday held a meeting in Julian hall where Infidels hold a meetings this was in the forenoon & we declared these things faithfully a large congregation of People & a great Part Infidels & in the afternoon had a meeting at Fan[n]y Brewers with Brother & Sisters & Partook of the Sacrement & in the Evening Brother orson & I went to the inifidel hall & a man by the name of kneelan asked us Some questions concerning this work the way & manner the reccord was found & translated & we answered them before the Publick congregation & then kneelon Preached against the work & he made Some [w]rong Statements or difrent from what we had it said was about the record & the testimony after he had got through he gave us liberty to Speak & remove his objections & then Brother orson Spake a few minutes & Showed the incorrectness of
his Statements & then told them to repent & we left them (Samuel H. Smith Journal, LDS Church History Library). Orson Hyde answered the twenty-one questions asked by Abner Kneeland. See above.