In the sidequest "Lost sword" you help Barl on the second floor of Bavelock Gym to find his sword that someone stole.

You go outside and find the sword next to the Windowmaker shop at the well. Follow the arrow.

Talk to Barl again and you are given 5 Pix for finding the sword. But you can continue and investigate who might have stolen it. Barl sais you can ask Mr Candyboot if he has seen anything suspicious, as he knows a lot about what happens in Bavelock.

Candyboot sais he saw Edna carrying a sword the day before. If you go talk to Edna it is confirmed that she indeed stole the sword.

Talk to Barl again and he will say that he will have Edna arrested, and you are given an additional 10 Pix.