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In Final Fantasy 5 in the barrier tower on the second world, there is a chest on one of the higher floors where you have to fight a Red Dragon (GBA name), he is pretty tough but not impossible and once he is dead the blood sword is in the chest.

It couldn't be obvious. The blood swords are swords crafted from Jesus' bones drenched in the blood of the Anti-Christ. They are found in your friendly-neighborhood Church of Satan!

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