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You cannot obtain it in Fable II

You cannot find it because in Fable II it doesn't exist. Whilst the original Fable offers the chance to take it players must kill Theresa as a sacrifice. As she's alive in Fable II it must be assumed that the world is one based upon the ancient Hero renouncing the blade and saving his sister. This is backed up by the aging wall painting in the Heroes Guild which shows the protagonist from Fable chose to become a kind and benevolant leader.

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