The following is from http://www.ign.com/wikis/final-fantasy-15
In Final Fantasy XV, The Sword in the Waterfall is the second major quest of Chapter 3: The Open World. In this mission, Noctis follows a lead on a potential tomb holding one of the Royal Arms.
- Recommended Level: 19
- Rewards: 2,500 XP
As you return to the Leville hotel, little Talcott will tell you about a legend of a sword hiding behind a waterfall in the region. It may be one of the royal tombs – so it’s worth checking out.
Before leaving Lestallum, be sure to scour the place for shops, hidden items, and a few sidequests before heading out. Don’t forget that Tozus Counter, Surgate’s Beanmine and the Tostwell Grill offer different information on the points of interest around you – so be sure to visit all the eateries to gain the lay of the land. It’s also important to note that the recommended level is much higher than the previous quest – giving you a good indication that you should be exploring and doing side quests a lot by now.
Take the car for a spin and drive up to the Burbost Souvenier Emporium not far from the waterfall itself. You can stock up on a few supplies here and either stay in the camper if you have XP to tally up, or head just a bit north to a campsite to eat some food to prepare for this new dungeon.
Find the Cave Behind the Waterfall
Just down the road from the emporium you’ll find a walkway down from the road leading to a trail that heads to the waterfall itself. Be wary, for the bottom of the trail hides a very imposing and dangerous giant snake: a level 54 Midgardsormr! While it is possible with a lot of potions, phoenix downs (and luck) to actually defeat it, it’s payoff isn’t quite worth it, so it’s better to just run past it and head to the waterfall.
Further up by the waterfall itself are a couple of Shieldshears – much closer to your own level, and a much more worthwhile fight. That doesn’t mean they are pushovers though – they are well armored and pack a punch with their claws – so be smart with dodging and blocking, and don’t be afraid to warp behind and strike from the back to get some blindside damage in before following up with techniques that favor the polearms and pistols they are weak to.
When the Shieldshears are down, grab the nearby ingredients and a item hiding by the bridge support, and if Prompto asked for it, snap a quick photo in front of the waterfall for some easy XP. Look for a sloping path up to the right of the waterfall – and sure enough, the entrance to a cave awaits you.
Search for the sword of legend inside the cave
Entering the Greyshire Glacial Grotto, be on your guard, legendary swords are often guarded by fierce enemies, and daemons love the dark. Hang to the left side of the cave as you head down to grab a Fossil Shell as you head further in. Another item hides up on the right but the ledge is too high to reach.
As you round the bend, you’ll be ambushed by your first batch of daemons: Flan. These blobby daemons are resistant to pretty much every physical weapon type you can throw at them, and are only weak to the one type of damage you don’t have access to: Holy. Use your elemancy if you can to deal non-resistant damage if you can, as luckily they don’t have a lot of health.
Past the Flan is a slippery slope that will send you sliding to the bottom of a passage filled with Imps. These guys also don’t have too much HP to worry about and are thankfully weak to pistols, daggers, and frost too. They do have a nasty habit of poisoning your crew, so be prepared with antidotes or have a few Star Pendants equipped. Make sure the rest of your team falls down after you to finish them off with techniques from Ignis or Prompto, and then search the room for a Potion in the frozen corner. Head up the narrow slope to the top of the passage, and look to the left as you go for a Rusted Bit.
The next slippery slope will also send you hurtling down a long passage with ledges you can’t reach – dropping you into another pit with an Arachne. This time you should be much stronger than you were last chapter – so again target its legs with you greatsword and lay the daemon low. From the spider demon, you can spot a path to the left with a Hi-Potion hiding around the corner, and a narrow ledge leading to your objective on the right. Proceed carefully across the narrow ledge – but know that the room below hides more Imps along with a Fossil Shell, and a nearby dead-end with a Star Pendant (good to equip in this area), as well as the path to the way back up. This path has a Potion guarded by three Flan, and further up is a bridge across the slope you slid down with a Carbon Bangle in the corner on one end, and an Ether on the other, before a small crawlspace leads to a long slope with a Fossil Wood leading to a Ronin flanked by Imps, and finally a path on the left leading back to the start where an Ammonite Fossil hides on the ledge above where you came in.
Across the narrow path, there are many ways to take. The left slope goes up to a hiding Arachne guarding a Hi-Potion on a small ledge, before the path curves downwards to a large icy room with an Elixir, and an abrupt dead-end with a Phoenix Down.
The center path leads to a large open area filled with Imps and an Arachne, which can be quite the tussle that may benefit from area of effect attacks and elemancy Defeating them, look behind an ice column for a Rusted Bit, and an Oracle Ascension Coin at the bottom of a steep cliff below the left path. Sadly, still not the path we need.
Going right from the fire deposit and take out a few Flan that spawn to find a raised path between two lower areas. The lower area on the right has some Imps skulking about, with a small dead-end holding a Friendship Band, while the center path will take you to your goal. Carefully navigate the ledges and steer clear of ice that will slide you into the areas below as you head to the lightning deposit. Grab the Fossil Wood on a high ledge near the deposit before sticking to the right wall and advancing.
Up ahead, you’ll be ambushed by more Flan – but be wary, for a Ronin will emerge as well. This level 17 foe is incredibly dangerous and can deal massive damage if you aren’t looking out for him – he will keep his sword sheathed but place his hand on the hilt when he’s ready to make a quick and powerful slice, which means if you are focusing on him, you’ll have time to prepare a parry and devastating counter-attack. If you need to – warp to the walls above to regen your MP before striking at him from above.
Now you’ll have one last narrow ledge to go around before entering a large and ominous chamber. If you thought you weren’t going to have any more trouble before the door to the tomb – guess again! A level 19 Mindflayer will appear with a couple of Imps in tow. It’s going to be a tough fight, so make sure to maximize his weaknesses to polearms and daggers, and hurl any lightning attacks you can as well. He’ll constantly call reinforcements, including more Flan and more Mindflayers – and will also employ confuse to get your allies to attack you, and even grab onto you and deal incredible damage. Have remedies ready to go, and heal up your team when needed – making note of the warp point above to regen MP and strike down while issuing orders like Ignis’ Mark that can hit several foes at once.
When the final daemon drops, you’ll finally be allowed to enter the Tomb of the Wanderer thanks to your new key. Enter and grab the Swords of the Wanderer, and you’ll unlock the new Armiger ability. This includes a new meter that grows in power as you attack and defend, and can be unleashed in a whirlwind of royal arms that increases your attacks by a huge margin. This also means you’ll have a brand new Armiger Nexus to put your ability points in – so be sure to take a look.
At this point, you can either take the long way back up to the entrance of the dungeon or just warp out.