Once you speak to the King, you will start a cutscene that includes a number of battles and Rosa leaving the party (so remove her gear if you're so inclined). Rydia won't be fighting either, but Yang will, so buy him a second claw, and give him one of the girls' head and arm gear. The type of claw doesn't really matter, but a Bolt Claw is optimal since you'll be fighting a few WaterHags. You should also pick up Cecil's Demon gear here. You can pick up a few Items and speak to Yang's wife in the towers, but you won't be able to get the Demon Shield until after the fighting is over.
As with the fight in Kaipo, killing the pairs of Fighters will cause their Captain to flee, but you'll gain less experience and gil. After six battles, there will be a plot fight that you cannot win, so don't waste any Items trying. After all is said and done, go to the inn to trigger the next cutscene and receive the Death Sword.
Much later in the game, after visiting Yang in the Sylvan Cave but before recruiting FuSoYa, you can speak to Yang's wife, who gives you a Pan to hit Yang with. If you do so and return, she'll give you the Knife, the most powerful Weapon in the game for Edge to Throw.
As with the fight in Kaipo, killing the pairs of Fighters will cause their Captain to flee, but you'll gain less experience and gil. After six battles, there will be a plot fight that you cannot win, so don't waste any Items trying. After all is said and done, go to the inn to trigger the next cutscene and receive the Death Sword.
Much later in the game, after visiting Yang in the Sylvan Cave but before recruiting FuSoYa, you can speak to Yang's wife, who gives you a Pan to hit Yang with. If you do so and return, she'll give you the Knife, the most powerful Weapon in the game for Edge to Throw.