You have to kill the boss, Astaroth, in order to find it.

The drop rate for the sword is very low, and the string of quests to battle Astaroth is very time consuming.

Astaroth is a male female named after the female Cannanite goddess Ashtoreth. The name "Astaroth" as a male demon is first known from The Book of Abramelin, written in Hebrew ca. 1458, and recurred in most occult grimoires of the following centuries.

There is an Astaroth's Gate near every town on Victoria Island except Lith Harbor and Sleepywood. You must be level 40 or lower to enter, though.

I think it is either the Buddhists or the Hindus. Not positive though......