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You are correct on the +2 or whatever on the THACO. Also, on the damage line, look at what it says there. For example, if it is a long sword that says 1D8+2, then it is a +2 sword. Sometimes, the damage bonus and the THACO bonus are different, I have a dagger that is +1 Damage, +5 THACO. It is treated as a magical weapon (can hit targets that can only be damaged by magical weapons) and is considered a "unique" item.
As far as THACO, it is a Pencil and Paper game thing. It stands for "To Hit Armor Class 0". If you look at the character sheet, you should see a line for THACO with a number after it, and maybe a number in parenthesis. That number (the first one) is the base number the character needs to hit a target with an armor class of zero (on a 20 sided die). The number in parenthesis is the adjusted number which takes into account all manner of magical items and weapon specialization (which means it will change as you change weapons).
So here is how it works:
Say I have a fighter with a THACO of 16. With a normal sword, I would have to roll a 16 or HIGHER on a 20 sided die to hit a target with an armor class of Zero. With a +2 sword, I would need a 14 or HIGHER. This works on a sliding scale, so a THACO of 16 is the same as a THAC1 of 15, or a THAC5 of 11. (the higher the armor class, the lower number needed to hit)
Oh, and a 20 always hits, and a 0 always misses, regardless of what the THAC0 calculation works out to.
Hope this all helps!!
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