Camping the Dazed Goblin Knight gives great exp. Other Dazed Goblins spawn there too. A full or near full group of mid 20's will do extremely well. The Knight spawns at least once every hour. Good Hunting.
I have been camping the room for a bout 4 hours with some guildfriends. He spawned 6 times in these 4 hours and we had 5 swords. Never been there again so we could have been lucky but this is personal experience.
The knight is a random spawn near the broken cart in the room. I'm not sure what his spawn % is, but it seems to just be a matter of luck. As far as I know, he drops the sword every time though.
I camped this guy for probably 30 hours or more in the old days when these swords were still one of the best weapons for a Paladin in his teens to the late 20's and we probably pulled 10-15 swords out of this room.
Hefty Smurrf Paladin of Mithaniel Marr Bertoxx Server
I believe this knight only spawns once per day. I camped the room for almost 4 hrs and he never showed up. Someone else in the zone said he was a once per day spawn. Great exp though camping the room.