Storyline: http://wiki.guildwars2.com/wiki/Mightier_than_the_Sword
When attacking Steag, if you use the elite mesmer skill Moa Morph, the mission is uncompleteable as the sword doesn’t drop. When Steag comes out of moa form (in my mission he was still alive at this point) the sword will drop on the ground for a few seconds but you can’t pick it up, it then dissapears permanently.
Hope this is helpful