hi,

nice sword,
to assign a material to a selection of faces go to the hypershade create the material you want (lambert ,blinn etc.)then select the faces go to the hypershade en rmb click on the material you want for it and select "assign material to selection".
To make the blade more believeable you should first of all remove the noise, turn your normal color to totalblack or darkgrey.
Now go to your specular color and give it a light grey color.
Create a low eccentricity(.3 orso) and the specular roll off a high value(.8)
Then go to your reflected color map button(the checkered button next to the slider)and select the env.chrome texture(this is to fake reflections).
and do a testrender tweak the above mentioned values to get the result you want .
good luck