Just sort of started act 2 and i still have Master Edmond's sword. there has been so far no option for me to give it back to him. am i supposed to?

im playing a priest, btw.

Yes, when you first started talking to him at his campsite outside Hillbrandt on the NE corner of the map, he would tell you his side of the story and how he lost his sword after that. There should be a dialogue option to offer to find and return the sword back to him. Once you have offered to do that for him, the quest to find and return the sword should be added to your Quests journal and you can turn in the sword and quest anytime you have the sword in your inventory. If that entry is not in your quests journal and you do not have the dialogue option to offer to find and return the sword when speaking to Master Edmond, then you may either need to restart all dialogue by using console commands to spawn a new Master Edmond, or just drop the sword on the ground and continue to act 2 without starting the quest.