Yeah, I agree, probably a Rep/CHA issue. If you're high in both areas, it's almost certainly a bug, and you should reload if it happens. (It happened to me once when I was playing as a Paladin.)
His sword is a +1 Bastard Sword that's also +3 against all shapeshifters.....like werevolves, some Druids and Pod People. Not that great (I prefer Long Swords myself), but you do have to whack a few shapeshifters late in the game--but I was perfectly happy getting along without the sword.
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Volothamp's Comeuppance
Everything you ever needed to know about the entire Baldur's Gate series......except spoilers.
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