I didn't find the knight hard to beat, but I don't remember what level I was at (I may have cleared out the orcs around Aleroth before then). I had to go up a level or two and use a gold charm (dropped by the dragon rider Zandalor killed) in order to meet the minimum requirements for strength and agility to equip the sword.
IIRC, he is a little stronger than the toughest thugs. He drops a good two-handed bas.tard sword consistently (which I used until I got the Nobleman's word), but I don't remember getting armour.
