A long time ago, I defeated Kraken. But my party was obliterated by Rachegeist and his party. So I waited quite long time. When I decided to try the Rachegeist again, I got the same event as if the Kraken was not defeated. I can find random kraken already. Is the sword quest bugged? Neither my old save, before the first attempt works. If I'm not mistaken, some unmarked update was installed yesterday.