(Post preview wasn't working for this reply, I apologize for any mistakes.)
Based on the feedback from the previous replies, it seems there are a few simple options:
1. Make it a concentration spell that lasts until long rest. That way it's not so much of a free power up and there's more cost to it, since it can be lost and needed to be cast again, plus not allowing other concentration spells at the same time.
((text moved for structure and coherence purposes))
As for argument against concentration for any melee weapon, Shadowblade would not be the only instance of a melee range effect at risk of concentration. Spirit guardians is at the same type of risk due to the concentration and melee range, but can still be made viable through the right steps, as Cachat says. Warcaster Feat, Elixir of Peerless focus, simple high Constitution Stat. There's a few different ways to help maintain concentration for a spell like that. That's part of the fun, figuring out a strategy to make a cool idea work.
I will say though, being able to combine shadow blade with any other concentration Spell does sound very potentially game breaking.
I applaud the structure of your argument, but I disagree with the logic of it. Spirit Guardians isn't a melee weapon. If you recast it, you can still attack with it(even against multiple enemies) without spending further actions. You can use it on top of melee attacks, even. Recasting Shadow Blade would eat an action, and requires another action to actually use. Keeping the concentration requirement would put Shadow Blade into the same boat as Flame Blade: a novelty no one actually uses in BG3.
If you don't believe my "no one ever uses..." argument, try running a Flame Blade build. Even if you build for concentration, you're still going to run into the frustration of losing your weapon and having to blow an entire action to get it back, and you may even lose it again before you get the chance to use it! You will get sick of the recasting cycle and abandon the build. Flame Blade and Shadow Blade Ring builds are powerful, but they remain novelties ibstead of mainstays within BG3.Allow me to correct myself. All this time, I had forgotten the spell used a BONUS ACTION, not an action. Dang it lol. I need to give the concentration parts of my argument further thought. While this clearly changes things with regards to my argument around concentration, I think my concerns about power spikes remain valid.
2. Eliminate concentration completely. But make it a 10 turn spell as it works in 5e. That way it stays in line as a combat spell to be used per combat encounter, instead of working for every battle one may encounter in any single in-game day. But at the same time making it not be so easy to lose because of losing concentration on it.
I like this idea.
However, it does not address my concern of the power spike that specifically Shadow Magic sorcerers and warlocks currently receive. Having a 2d8 weapon at level 3 is already quite good, but unlike wizards, Shadow Magic sorcerers and warlocks gain an additional benefit(Eyes of the Dark and Devil's Sight) that grants them much greater power because they can use their class features to see in Darkness, allowing them to attack at advantage with their 2d8 weapon. Having both a 2d8 weapon and being able to swing it at advantage willy nilly is a bit much for character level 3, I think.
3. Maybe make the spell add a condition that makes one unable to cast concentration spells while Shadowblade is active? Not unlike Lethargic.
This would reduce the effects of the level 3 power spike I'm concerned with, but raises another hypothetical issue for Shadow Magic sorcerers and warlocks: it makes them unable to use the Shadow Blade/Darkness combo by themselves. This would make Shadow Blade much less practical than simply casting ranged spells from Darkness, because now they would be reliant on a teammate to wield cast Darkness while they are unavle to concentrate on top of having to close the gap to do a melee attack. As well, with the way Eyes of the Dark currently works, a Shadow Magic sorcerer would not have the Darkness immunity if they were wielding Shadow Blade. I think this would be particularly unfair to Shadow Magic sorcerers.
Options I disagree with:
1. Taking away its upcast options. It works that way out of the box in 5e. Taking that away feels like it hurts a lot of player liked builds. Sounds like taking away people's fun. Even with the additional damage from the Stone. If the stone makes it too broken, then time limits need to be placed on the spell, in terms of turn limits (or even concentration I suppose, though now we'd be starting to go in circles)
And I could say time limits and concentration are "taking away people's fun", too. It's an extremely poor argument because it is simultaneously both all-encompassing and all-excluding, I can't cite the name of whichever rhetorical device it is, but it is an extremely poor argument.
((Edit: Unfalsifiable. Couldn't think of the word. "Taking away people's fun" is an unfalsifiable argument. Arguments of this type cannot be proven or disproven, and have no place in any good faith discussion.))
Similar is the argument comparing BG3 to 5E. As many things as they share, they also divurge quite a bit. Saying BG3 should be like 5E broadens the scope of argument with irrelevant things. A video game is never going to be tabletop. Too many irrelevant variables. It's like opening a square can of worms and calling it a round nail because you have a hammer and everything you see is a really bad mixed metaphor, except the mixed metaphor is actually quite accurate.
My issue with upcasting Shadow Blade and the Resonance Stone are that it provides too much of a power spike for a melee weapon when the two are used in concert. Giving it a fixed base damage would solve that. In the context of BG3. 4d8*2 is really good for a melee weapon. I think 2d8*2 is very reasonable, and it would fall in line with the damage provided by the ring version.
2. Changing its damage type or taking away its dim light advantage effects. Those are all out of the box effects. A lot of people are to used to the spell already working that way
3. Changing it from an 2nd level spell to a minimum 3rd or 4th level spells. For many of the same reasons that were previously stated.
Is this more a game mechanics or personal preferences thing? I don't see how increasing the minimum level of the spell could be bad from a game mechanics standpoint.
In conclusion, I do like the idea of a turn limit to Shadow Blade, but a turn limit does not succeed at addressing my issue of power spikes at character level 3 and character level 9. Increasing the spell level and removing benefits from upcasting, however, does. I
feel that combining the three nerfs would be a vit much, but from a game mechanics standpoint I think it'd be reasonable.
((Edit: I'm saying character level 9 here because that is when the 5th level spells are available and the level players can generally expect to be when acquiring the Resonance Stone. If anyone wants me to expand on any of my arguments, feel free to ask. I don't mind elaborating or clarifying.))