Okay you got a lot of good advice, so I'll leave you with one last thing. In one of the guard towers in Suran, there is an incredibly good Long Blade called the Sword of White Woe. It's under a bunk bed at the very top of the tower. The only thing is, it's very expensive and the guard on the top floor will arrest you if he sees you taking it. Find a way to get rid of him and it's yours. I reccommend using a Command or Demoralize scroll to get him away from the area. If you're feeling brave, you can taunt him into attacking you, or use a Frenzy scroll. Make sure he gets the first hit on you, and then you're free to retaliate. Guards are really, really tough, so use your Adrenaline Rush ability and any other magic items that can help you survive. Or, you could steal one of the lesser weapons lying around, run downstairs, pay the fine, then run upstairs and take the sword before he gets there.
This may sound like a lot of work for just one sword, but seriously, it's really good. If you can't pull off any of those tricks in the first paragraph, the same sword is in Balmora's Eastern Guard Tower and it's a bit easier to get. The sword is on top of a closet on the top floor and if you position yourself right you can get a pillar between you and the guard.