Gold charms can be dropped randomly by lizards in the Dark Forest. You can get one by killing the talking tree. I lucked out my first game; the dragon rider Zandalor kills when you leave Aleroth dropped a gold strength charm.
Potentially the best one handed sword is the Sword of the Gods, found in the wastelands. Mine was a bit better than my Nobleman's Sword. I always went for high damage first, then bonuses (which varied depending on the part of the game) and ignored the charm quality (only used 1 charm, then decided to stop so the game wouldn't get too easy).
Passive damage skills and skills on weapons are treated separately, so they can both be applied the same hit.
