For the time being, you are told to tell Horwell about this problem. Go back through the courtyard and downstairs, then towards the Knight Academy. Tell Horwell about your predicament, and he’ll leave to speak with the Headmaster. Speaking with the girl nearby has us led to Pipit. Head into the Academy.
Head downstairs and speak with Pipit; he is near the stairway and clothed in a yellowish garb. He tells you to ask around the plaza. Go down the hall and leave once more, via the large double doors.
You can now go through the gate to your right, so do so. Continue along the path and a boy will ask you to roll into the nearby tree. Dash at the tree and shake the Nunchuk to hit the tree.
After this, go further along the path to find a few Knight Academy pupils in the southern plaza. Approach them and you’ll watch another scene, in which you are introduced to the bully, Groose, and his gang. You also get a bit of help from Zelda … and some other odd things.
After the scene, Zelda advises you to tell her father about what happened. So go to the Knight Academy and to the second floor.
Go into the Headmaster’s room and speak with him, and it seems that the ceremony will be delayed for you. Yay, we’re so special~! Exit the academy via the double doors on the lower floor.
Outside, go left and beneath the arch to be called over by Pipit. Go over to and speak with him. Fledge will be forced to tell you that he knows that Groose and his gang stole your Loftwing. Surprise, surprise. Anyhow, it is being kept underneath a waterfall, which happens to be marked on your map with an X. (You can check the map with the + button.) Next stop, the Sparring Hall. You’re actually quite near it, so head on in.
Upon entering, go to the other side of the room and into the back room to find a chest, inside which you’ll find the Practice Sword. Return to the room you originally entered and cut down the logs.
- Ignore the log hanging upon a rope.
- Use a up-down (vertical) slash for the one split in half.
- Use a horizontal slash for the one with the skinnied mid-section.
- Use a thrust for the one with the diamond-ish hole.
- Use a diagonal slash for the others.
- After the above, you’ll do a spin attack, then the fatal blow.
Try to exit the Sparring Hall and there will be a scene, in which your instructor decides to let you “borrow” the Practice Sword. (In all honesty, it is odd how you never give borrowed swords back in the Legend of Zelda, this one included.) Then exit the hall.