Replying to this two-year old post because I just spent a whole day struggling to find that damn katana, and the directions given in this thread were ass. So just in case somebody else drops into this thread looking for where to find that katana/Masamune...Where do you find this katana? I can't for the love of me find it
The shortest route is this: go to the Dimlit Waterway, and then go up that ladder back to the Path of Awakening.
Then go right into that vertical hallway, and go all the way down.
Then go left into that room at the end of that hallway. You'll see a stairway flanked by two lit braziers.
Go up that stairway, and then you'll enter the room with the katana/Masamune's shadow soul.