The Legend of Katie.
When he became a knight, Sir Largely was very much aware that getting your image right was very important and having just any old sword wouldn't do, so he wanted something impressive that would hopefully make impressionable young ladies go 'ooooh!' and fall into his arms. He'd gone to the royal armourer and asked to see a selection of weapons and was shown a large variety of blades. At that point he didn't have much cash and couldn't afford the really big gem-encrusted rune-strewn shiny ones so had to opt for a reasonable looking cheap one.
He had taken it home, polished it till it gleamed, stuck some fake jewels on the hilt with low cost glue and inexplicably named it Katie. Sir Largely's DIY skills were poor at best and the jewels had fallen off after about two weeks but no-one really noticed, so instead of replacing them he had developed a habit of telling people his sword was magical. It was a lie, but as people never accompanied him on his quests it didn't really matter. The odd thing was, that while he thought he was fibbing through his teeth about Katie's magical powers, he was actually right: the Royal Swordsmith had accidentally created a magical sword. Katie, when held correctly threw up a magical field that protected the wielder from almost anything, including dragon fire. The protective aura glowed bright green and was quite a sight.
On his initial expeditions Sir Largely didn't see it, as when he had gone after dragons with Katie and they'd flamed him, he held the sword up like a shield and shut his eyes in terror. Surviving these encounters inflated his already oversized ego to hideous proportions. Eventually when he actually witnessed Katie's magic he became even more insufferable in court. Unfortunately for him when going after Fiona, Dragon's surprise attack had meant he wasn't able to raise the sword in time and thus ended the heroic and somewhat big-headed existence of Sir Largely Combustible. Due to Katie's spectacularly dull appearance, Shrek had ignored it completely as he ran through to grab the girl as had many other (now deceased) adventurers. Now the magical sword lies mostly forgotten. Maybe one day another self-centred armour-clad adventuring berk on the hunt for riches and a panicky damsel would explore the crumbling castle with its lake of slowly cooling lava and discover the dull yet magical weapon. Then again, maybe not.