I get how it sounds, but I had the exact same situation in it freaking pissed me off to the point where I didn't bother with any of the other side quests.

When the final upgrade requires you to keep a sword that was weaker than the sword you just got, and you've never kept another sword prior to this, it kind of makes sense that you think it's okay to sell that old sword. Till it turns out you get another quest immediately after saying hey, if you have this old sword you can upgrade it. They could have avoided that whole situation if they just allowed me to buy it back. Or create it again, oh but it uses item quests that are exclusive to prior quests you can't redo, so you really only get that one chance.