That would be Torian Kel's Ancestral Sword, as long as the wielder's aptitude is between 0 and 100 magickal anyway; Kryggird's Falchion otherwise. Both of them are strictly endgame weapons, though, due to them being located in the very final of locations, past the point of no-return to the main gameworld.
There are, say, five competing uberweapons, but the single most powerful in the hands of a character depends on his target strength and aptitude.
The Dagger of Speed, if he's a backstabber. The Bangellian Scourge, if he's thoroughly evil. The Sword from the Isle of Despair, if neither.
If you have the WIP, then the flamey firey thingy from the fireking's corpse is surely the cheese, whichever way you swing.
Lianna Pel Dar's sword is also an excellent choice. You can get it as early as leaving Shrouded Hills for Dernhom (and spending the fate point you got for dealing with the bridge bandits to steal it).
While its damage efficiency fades next to Torian Kel's Ancestral Sword, it actually surpasses Kryggird's Falchion at <20 strength. Suffice it to say, that thing is a Void-tier weapon while still being in Arcanum. rroyo sure did overpower all of the Fireking's gear. Since backstab was even more OP from the very beginning, though, Dagger of Speed (replaced by TKAS near the game's end) are still the best weapons for backstabbers even in the A:WIP. Actually greater average damage per action point than the IoD Sword below 13 strength, though 14 points of strength are required to use it without to-hit penalties, at which point the latter is better, more so with each following point. Due to how early it can be acquired its a good weapon for filthy thieves to have until the Isle of Despair chapter, at which point it can be given to a strong follower or even kept by those who value the intimidating look of a two-handed sword over a few additional points of damage per action point.
I find it rather disheartening that one of the best swords in the game is that stupid sword from the pit in the Isle of Despair.
Pretty sure the creators never intended that sword to be that good. Each of its stats on its own looks quite inconspicuous so it was fairly easy to overlook what a powerful mixture they create together. Thinking about the sword reminded me of a theory I once wanted to share. Was just about to create a lengthy offtop when I remembered of the "create new thread" feature.
Yeah, it really is pretty random (like several things in that pit). Come to think of it, Arcanum has several glitches, that I intentionally never tried to fix. This sword can be considered one. And another one is the Staff of K'an T'au (from the Spot Traps mastery quest, although you can also always force the location if you know the exact coordinates). Using it to cast Teleport doesn't deplete its charges, so it's effectively infinite as long as you don't cast the other spells the staff has. I never actually bothered to find out what's causing this. Perhaps it's the fact that the Teleport spell has several phases (initial cast and waiting for the player to select a location and then the actual teleportation), I guess it will glitch like that on any item. Now you might be thinking, why did ol' Drog neglect these no doubt very fun exploits, but fix the other ones like the permanent follower trick. Well, the answer is quite simple... Deal with it! My patch, my rules.
Eh, I've been speaking Mandarin Chinese exclusively every day for over a year now. My English ability took a dive, it seems...