You get more experience for taking the sword out and putting it back. However if you leave it in the stone, you can wait until you have done all quests in the Dark Forest, then return and take the sword permanently. If you do not re-seal the demon in the stone, it will kill the traders and elves (though not the one for a required quest), but if you are done with that area.....
Sword from the Stone (56KB) - Fake Excalibur
