If you have the "Find the sword" quest completed, you can do whatever you want with the sword (equip it, sell it, drop it). There was a bug in Edmond's script that allowed the player to keep the sword if he brought it to Edmond only after the main bad guy in Act I was executed. This will be fixed in the 1.10.17 patch.

Thanks for the reply. So should i keep it until the new patch comes along? Would it work then? seeing that im a priest i can't use it all and it bothers me somewhat since i want to fully complete my missions in hillbrandt (im already in Act II).

If you have completed the "Find the sword" quest (meaning you don't have the quest in your Journal anymore), then the patch won't help you because from the game's point of view this quest has been done and the sword being still in your inventory doesn't matter. There was one line missing in Edmond's script that didn't remove the sword from your inventory at the moment the quest was marked as done.

If you have the quest finished, you can get rid of the sword now and consider the quest succesfully completed (because you were rewarded with 500 XP, your reputation was raised and you also received a random item as it was supposed to happen). If you still have the quest in your Journal, you can wait for the new patch and it will fix it for you (by adding "remove the sword from player's inventory" action into Edmond's script).