I won every fight in the arena, including the last one against golems. Maybe I was offered the choice between taking the blade and teaching my smiths how to forge new ones, I don't think so, but I may have missed it. Anyway, I ended up without any new blade, and with a corrupted save afterwards (but my smiths were able to produce legendary weapons indeed, and I won the intermediary items in the arena).

I have not found a way to upload a file from China as both dropbox and rapidshare are blocked, but I can email my saved games or upload them somewhere else if you tell me where.