Were you looking for the actual Blade? See The Gidbinn.
Blade of the Old Religion is the second quest of Act III. It's initiated after the player completes The Golden Bird and talks to Hratli. The quest is completed when the sacred blade, called The Gidbinn, is given to Ormus.
When Mephisto's Hatred spread across the countryside, corrupting the capital city of Kurast, the few survivors fled to the Kurast Docks. In order to protect the dockside from the forces of Evil, the sorceror-smith Hratli created a magical warding spell that would hold the forces of evil at bay. However, as of late the warding spell seems to be losing its power. There's only one ancient artifact that has the power to reinforce the spell: its called The Gidbinn, an ancient blade from the old Skatsimi religion. Sadly, the Blade was lost when the corrupt Zakarum took over the country. The Blade has to be found if the denizens of the Kurast Docks hope to survive.
Further Information and Tips
You will find the Blade somewhere in the Flayer Jungle, usually hidden within a village (sometimes The Gidbinn can be found near the entrance to the Flayer Dungeon). You should see a small altar-like construct, on top of which The Gidbinn rests. When you try to grab it, the altar erupts in flames. A Unique Flayer should now appear. Kill it, and the Gidbinn should drop. Return it to Ormus to complete the quest. After talking to Ormus, move away from your current posstion for Ormus to start his ritual. While he is doing it, talk to Asheara and she would offer you the service of her Iron Wolves. Come back to Ormus to revceive a ring.
NPC Quest Dialog
Hratli: "As I told you before, I placed an enchantment upon the dockside in order to keep the demons at bay. But lately, the enchantment seems to be weakening. If memory serves me correctly, there is a holy Skatsimi blade that could revitalize the enchantment. The blade is called the Gidbinn. Find it, and our sanctuary here will remain safe."
Alkor: "Have you not heard of the Gidbinn? Well, allow me to reduce your ignorance on the subject. The Gidbinn is an enchanted dagger - a religious artifact greatly valued by the Old Religion, Skatsim."
Asheara: "The Gidbinn will reinforce the enchantments that protect the dockside from the evil that infests Kurast."
Deckard Cain: "I've done some research on the Taan mage-clan, and it seems that most of their magical studies were focused on Skatsimi rites. If anyone is qualified to use the powers of the Gidbinn, it would be Ormus."
Hratli: "As far as we know, the Gidbinn is in the possession of the Children of Light. They do not wish it to fall into the hands of those who can restore its powers. You may not believe it, but Ormus is the one who can use the Gidbinn to protect us."
Meshif: "The Gidbinn is one of the few remaining relics of Skatsim, the Old Religion. It is reputed to have great powers."
Natalya: "Don't let the Gidbinn's size fool you. Though it is only a small dagger, it holds tremendous power when in the hands of a true Skatsimi mage."
Ormus: "Ormus is familiar with the Gidbinn. But how would a powerful Skatsimi artifact aid an unbeliever like you?"
Alkor: "Legend has it that the Skatsimi priests placed great power within the small blade. Power enough to repel this terrible jungle-curse which encroaches on our sanctuary."
Asheara: "I'm certain that the Gidbinn is very closely guarded."
Deckard Cain: "Since you haven't come across the Gidbinn yet, the dagger must be deeper in the jungle nearer Kurast."
Hratli: "Once the Gidbinn is found, Ormus will use it to strengthen the protective barrier around the dockside."
Meshif: "The jungle is like nothing you've ever seen before. Imagine Paradise festering like a wound... then bursting!"
Natalya: "You'd best get back out there and find that blade. The jungle creeps further into this camp by the hour."
Ormus: "If we are to have peace from the shadow, you must find the weapon which will destroy the Light."
Alkor: "Hah! You have stolen the fabled blade from right under Zakarum's nose! This is a great day, indeed!"
Asheara: "Now that fewer of the Iron Wolves are needed to guard the dockside, some of them have volunteered to accompany you free of charge."
Deckard Cain: "Who could have foreseen that the Old Religion would play such an effective role in our war against the Three? Again, your efforts amaze me, my friend."
Hratli: "The Gidbinn's magic can only be channeled through Ormus. Take it to him. He has the necessary knowledge about the ancient Skatsimi magics."
Meshif: "With any luck, the spirits of Skatsim will grant us revenge upon the powers that ravaged this land."
Natalya: "You are truly amazing, stranger. There are precious few items in the world that would tempt me to go up against the Children of Zakarum and their midget minions."
Ormus: "You have done well, noble hero. Ormus congratulates you. The old spirits of Skatsim will watch over you for returning their sacred blade. Now, after all these years, Ormus will once again use his powers to protect the innocent from the shadow. The spell that protects the dockside shall now be reinforced."
Ormus: "This magic ring does me no good. Here... Wear it proudly!"