I ended up finding the chest by hovering just above the water, where I could see everything underwater as if it were above water, and saw it immediatly. That was annoying.
Then I went to the waterfront, wandered around a bit, then found myself in this temple with a bunch of traps. came across this girl who talked about a hungry sword. I, of course, was obliged to feed it. At level 5, I was no match... the first time. I reloaded and shot her from sneak with an arrow, literally halfing her health. Then, using my awesome backpeddling skills, I shot arrows at her while backing away from her around the room. She fell by my poisoned arrows. Then I ganked her awesome armor and sword... it's REALLY heavy, so I can't really move fast with it on, but oh my god, it's powerful. I'm going to try finding some tough enemies and whack them with my 11 damage sword wearing my 6 and 7 armor pieces, hopefuly leveling up enough where I can cary the armor and some other stuff without being overencumbered.
ᵗʰᵉᵇˢᵍ๒ᵍᵐᵃᶥᶫ∙ᶜᵒᵐ
ᴸᶥᵛᵉ ᴼᵑ ᴬᵈᵃᵐ