Excalibur becomes available once you speak with Loon the Seer and he offers questions to which you can answer “A king?” followed by “A sword?”
His response is the clue you need to find Excalibur on an upcoming trip to the pungeon. Wander the pungeon until the earth door is an option. Go through the earth door, then (in order) the fire door, water door, and acid door. The next room will have a door with a strange symbol over it (it’s labeled the sword door). Enter the room, open the chest, and claim Excalibur.
