I believe if you get put in prison while carrying the sword which is still a quest item, you lose it and can't reobtain it. Also according to one of my experianced friends whos played Oblivion since its came out (on pc), apparently the man who asks for the sword is a God. Although he might just be saying that to keep me away from him. He is abit' of a jackass irl and might be lying.
I've been playing 3 days, level 10 so far, full Full Burma and found unique glass helm underwater, although I don't really like it, tbh.
I don't plan on posting on this forum much but from what I've read so far i thank you for sharing knowledge.
