I'm in my 3rd playthrough but still don't quite understand why Yseyr and Lucia are mortal enemies and what the significance of the sword is.

I think it's insinuated that Lucia somehow offends Berath (maybe by living too long?) so Yseyr wants to kill her as a good Berathian would.  Except Lucia becomes a death guard which kind of indicates that she's also a Berath follower?  And when she first meets you on the high seas she recognizes your Berath chime and leaves you alone, seemingly out of respect.

And the sword she protects is an heirloom of Grand Vailia but does it have any significance beyond that?  Why must Yseyr keep it from Lucia?  The game makes it sound like Lucia is the rightful protector of it.

Death Guards don't need Berath's doing nor blessing to come into existence:
 

PoE lore said:

Extraordinarily rare, death guards are sometimes created upon the demise of

a particularly determined individual who refuses to leave the physical world for the Beyond. Paladins are the most common subjects for this terrible transformation, but priests and other exceptional zealots often suffer the same fate. Death guards occupy their former bodies, but the energy that allows the soul to remain in the physical world rapidly consumes the flesh, leaving only bone behind. Death guards are often driven mad by their state. They are terrifying foes to behold, striking fear into those who stand before them. Their limited connection to the Beyond allows them to summon fearsome balls of flame, summon shadows, and even slay the living with a word.

In the case of Yseyr he had the determination to serve Berath and retrieve the estoc/kill Lucia Rivan even after he was killed. 

Lucia Rivan was a Darcozzi - an order which normally isn't known for following Berath (their favored/disfavored dispositions don't really allign) - but she was zealous enough to rise as Death Guard after she was slayn by Yseyr. I don't recalls what she was so zealous about but iirc she was charged with protecting the blade. So when Yseyr wanted to collect that blade for Berath and Lucia wanted to guard it two very strong wills collided, leading to the creation of two Death Guards. 

Why she laves you alone after sensing Berath's chime? Maybe fear - a priest of Berath is her archenemy and Berath herself wishes her gone?

Yseyr/Berath want the blade because it devours souls (or essence) - and that doesn't seem to sit right with Berath. It somwehat imitates what the gods do (feeding on souls to sustain their existence). Maybe it could even be used to gather godlike powers over time - if you'd only slew enough enemies or unlock its greater powers otherwise. Yseyr mentiones that the blade is too powerful to be used by kith/mortals. 

There isn't necessarily a good/bad side here. It's just two sides wanting something really bad.

Edited October 22, 20214 yr by Boeroer

Ok that makes sense, especially the part about why the sword is offensive to Berath.

It would be interesting to learn more about Lucia's motivations but maybe it's left mysterious on purpose. 

1 hour ago, Boeroer said:

Why she laves you alone after sensing Berath's chime? Maybe fear - a priest of Berath is her archenemy and Berath herself wishes her gone?

Aaah, I always took her dialogue for reverence rather than fear towards Berath...

"What the goddess of Death has marked, I will leave untouched." She nods solemnly, once, then with a tilt of her skull, steers the ship away."

Her being respectfully cautious does make a lot of sense.

1 hour ago, crdvis16 said:

It would be interesting to learn more about Lucia's motivations but maybe it's left mysterious on purpose. 

Lucia motivation is to return the Engoliero to the Darcozzi family. I think this is made more clear in a convo branch that opens up if you supported Furrante:

"If he is a Darcozzi paladin, this Furrante should aid my duty to return the sword to the royal line, should he not? How does my ship matter to Grand Vailia?"

"If the Principi are truly the closest continuation of the Darcozzi legacy, then I must deliver the sword to them."

 

Edited October 22, 20214 yr by Noqn

Well, we did run into Berath-worshipping Fampyrs in WM1. If you're a priest of Berath they'll even go fight the ogres for you.  My guess is that direct intervention in the mortal realm is something that the gods have mutually decided to not engage in too often, but they are capable of it nonetheless (e.g. Wael stealing all your scrolls out of spite), so vessels that break the life and death cycle are probably not eager to attract Berath's ire.

13 hours ago, Boeroer said:

There isn't necessarily a good/bad side here. It's just two sides wanting something really bad.

So how did my kids become death guards? Well, they were fighting over a toy and I was tired of intervening, and before I knew it...

classic Dad Guards