Well the sprite is hundreds of times better than the original (in my opinion) and looks like your style now, but I agree, the animation overall is stiff. I had to actually look at the frames one by one to notice you animated the arm. Just from looking at the animation playing, I thought you only copy pasted it and moved it around each frame. It's definitely moving in the right direction, keep it up.
As far as the sword, I can't give any advice on that since I don't animate swords (or animate in general) but from what I've seen of other pixel artists, I'd agree, some kind of rotation with massive amounts of cleanup.
As much as I hate to use Jump Ultimate Stars as a reference, it does get the point across here (barely);
I've slowed the animation down but notice how the sword changes slightly in every frame? That's the effect I think you want. Also a good think to take away from this is how the hand (in the back at least) changes in every frame. Small details like this are the reason it's important to redraw frame by frame, so I really can't stress that enough.