Well, maybe I jsut suck but I can get the sword. can go to the hut to the left, back down to the only npc at the start.
and die to the soldiers. cant find the save button or if there are autosave places I havent reached one yet. so can only start a new game :-/

After getting the sword you are supposed to go down right, under the stairs. There is a stronger enemy that activates an event. Save option is unlocked after the event.