So I laid down to take a nap this afternoon and fell into a Dream about what happened after I ran away from my cousin at the camp. I ran off into the woods, which are full of monsters and I don't have a weapon there, and find the entrance to the Labyrinth. Yeah you read that right - The Labyrinth from mythology. Well I didn't find it so much as my clumsy self fell into the entrance but I made it through okay, found a path to the Underworld and my dad's realm and that's where I got my sword.
Which explains why it drains Will if he touches it but doesn't affect Hazel or I - if anybody other than a child of Hades/Pluto touches it it will drain their life force because it's made from Stygian iron.