http://www.mediafire.com/?itumz5yxit1
Open up the game, and walk into the cave.
On the cave DMap, the sword (and ocarina) are disabled.
When you enter the DMap, the sword appears to become disabled for a couple of frames, then it returns to Link's inventory (check the subscreen).
If you use the level 4 cheat to put on 'no walls' and walk right one screen, the sword will remain disabled on that screen.
As you then move onto other screens, the effect of the sword becoming disabled for a couple of frames and then returning is repeated.
I have a feeling it's something to do with what scripts are on the screen you're on; but none of the scripts used reference the sword item.