A Blade of Legend
Now the real reason behind getting the previous quest, that nifty weapon.
Horatio will give you this quest no matter what the outcome of the last quest is. Except if his daughter left him, he would be greatly saddened.
He tells you where he saw it and gave you the key to the place.
The cave is in the Southern Forest, near where you found the dying postman.
Open the mysterious door with the key Horatio gave you.
The cave is a straightforward place so just keep on going.
In the last chamber, you will come across the barrier Horatio mentioned.
Solve this by dragging the colored flames to the right brazier. The order is, from left to right, White, Blue, Green, Red. Light them as shown here and the barrier should lift.
At the end of the hall, you will fight the Illuminated One. This is a very strong foe that is holding the weapon you are after. Do your best in defeating him.
Defeat him in battle and you will find the Rusted Light's Awakening.
Take the Rusted Light's Awakening.
Return to Horatio and you will show him the Rusted Blade. Turns out though he carries the magical scabbard for the sword. After sheathing it in, and pulling it out, it is restored.
The Light's Awakening is a powerful one-handed sword. This means you can equip a shield with it. Best get one of those greatshields for better survivability. You can also change the default skill ,Double Strike, with another weapon skill if you have the rune for it.