@Carl
My suggestion is that you leave stage 1-4 to be your last boss, especially because he's one of the most complex bosses (not hard per se, but there is a lot to remember and to pay attention to in that fight). Also, stage 1-4 has the blue dragon, so you may want to stack up on arrows or better bows before you tackle him.
To upgrade the Dragon Sword or any weapon that has a prefix attached to it, you'll need to find Blacksmith Ed in world 2-1.
When you're inside the complex with the grinding wheels in 2-1, after you get to the part which had a lava pool that you cooled down in order to gain passage to the boss's elevator, you'll reach a stairway that has a trio of Sword carrying miners.
To the left you'll find a small doorway with stairs and to the front of you, you'll find a path barred with wooden stuff. Destroy all those wooden stuff and continue through that path. At the end, turn right, and you'll see a lever there. That lever will activate an elevator next to it, the elevator that wasn't functioning whenever you started 2-1.
At the bottom, you'll find Blacksmith Ed.
Be mindful though, in order to upgrade any kind of special weapon, you'll need to have the soul of Flamelurker, the boss of 2-2, so you may want to tackle him first.
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