When you find the entrance to Khazra Den, in the northwest part of the Fields of Misery, your quest log updates:
Sword of the Stranger
New - Find the Glowing Sword Shard in the Khazra Den
Enter the Khazra Den. Inside this cave you will run into Enraged Zealots, Moon Clan Warriors, and Moon Clan Impalers. Fight your way to the rear of the cave. Soon you run into Urik the Seer, Prophet of Torture, performing some ritual with some cultists. He says something about needing to hurry with the ritual, Maghda will be here soon, it is turning. You need to kill the cultists surrounding the Glowing Sword Shard. Attack Urik the Seer. He shoots fireballs at you, as well as summoning Dark Hellions, but otherwise he is not as tough as some other bosses you've run into. Suddenly you hear a dark, female voice. She asks, who are you to take what is hers? You tell you will return this sword to its owner. But Maghda says she has claimed it. She leads the Coven. The Shard is hers.
You do not agree with her, and a battle ensues. She summons Enraged Zealots to fight you. When you kill them, she tells you well fought, but you will never possess the next piece. It has fallen where only the ancients may tread.
Take the Glowing Sword Shard. Then, take the sword piece back to Cain in New Tristram. Explore the cavern before leaving, there might be some chests around here containing some random loot, but otherwise the cavern is pretty small. Return to New Tristram, either using a town portal or the Misery Fields waypoint.
When you tell Deckard Cain about what happened, Leah says this sounds like those dark cultists Cain told her about. He asks the stranger if any of these events jar his memory. The stranger has no memory of this coven, but he senses a far darker shadow guiding its hand.
You should go over your inventory, equipping your most powerful items. You can also equip items to your Templar follower, so make sure he is holding a decent weapon. Note that your Templar can only use one handed spears, maces, axes, swords, daggers and shields, so you won't be able to give him a two handed weapon. The rest of your items, either store in your stash, sell to the merchants, or put the more valuable ones for sale in the Auction House.
This completes the quest, Sword of the Stranger.