Nooooo!! Don't use the sword in the stone! (Bad advice, bad!) If you release the sword before doing all of the Elven town quests quests will be broken, and you'll lose out on a lot of experience. Plus you lose out on reputation points, and you might get killed by the ghost. You should instead just go to Ars Magicana (the merchants area in Rivertown), go to the Smith and reload before you talk to him for the first time. Once you find the sword that you want in his inventory, buy it (otherwise reload). Another great sword is the two-handed Sword of Chaos, which is near the Dwarven Forest in a cave-like structure, underneath lots of rocks and boulders. There are only a few orcs, snakes, puppy dogs (heh) and bees around there, so you should be fine fighting them.