I am trying to complete all 3 tests of virtue and have finished the Test of Love and the Test of Truth. I have gone through to the dragon in Test of Courage, following a walkthrough I found, and gotten the gem from it. I left the test to go talk to Erethian about the black sword. Apparently, there needs to be a prompt "powerful artifact" available for me to get him to show w the forge. I cannot figure out how to make that prompt to appear, no matter what I do. I am completely stumped. What else do I need to do to progress the story. Do I need to actually kill the dragon and get the Artifact of Courage before I can get the sword made?

You need to first speak with the creature in the mirror on the opposite side of the castle and learn of its powers.