Locate Battle-Mage Dathric's quarters in Wizard's Row and return the blade to his weapon rack. Then, speak with Custodian Dieworth at Kirin'Var Village.
The sword is of exceptional quality, finely crafted and perfectly balanced for a battle-mage. The seal of the Kirin Tor and the name "Dathric" are engraved into the weapon's pommel.
Turning the weapon over in your hands, you notice a sense of wrongness radiating from the metal, as if the item is torn between two worlds. Could this be the item anchoring Battle-Mage Dathric's spirit to this world?
Perhaps returning it to its proper place can break the bond, freeing Dathric's spirit to rest at last.