Not sure if it's a bug or what, but I found the sword and went through the dialog, I interacted with it again and the dialog box came up again, but the game locked up and wouldn't respond to any further inputs.
This is a known bug with NESMaker games unfortunately. Sometimes if you go through text a few times in a row it'll get stuck, but it does come unstuck, I promise. I'm hoping to find a way to fix that in a future update.
