anyway here are my notes on restoring the sword in the kid's story, though i havent managed it yet.
notes lay out that you need an effigy of faith belonging to the weapon, a blade with the power of rebirth, the weapon itself, and an altar of its faith.
the blade of rebirth is found in the old growth at the beginning. i think the effigy of faith is the fei talisman found in the river, though im not certain. the weapon itself is in the bed upstairs.
as for the altar, the lady's diary states the altar of her faith is "hidden within", and that the word to unlock it is "Epichloe". i think the kid's name is Epichloe as said in later stories? my thought for the altar was it was either the lady('s shade) herself, or perhaps using Epichloe as a password in the main menu, but these dont seem to do it. any usage of knife, talisman, or sword on the shade seems to still just crumble the sword. she has it restored in later stories. my next guess is using a mushgirl named Epichloe to run through the story.
edit:
its far more simple than all that! i never slashed up the portrait in the foyer bc i felt like it was disrespectful. but there's a hidden passage to a literal altar within it. after reading the journal and learning the password, the kid will unlock it, and can do the ritual with all the items and instruction.