OBSERVED: When you're in the Cloakwood Forest (AR2200) and come upon Aldeth, you can either kill him or pickpocket him for his sword. If you pickpocket him and then assist him against the druids, you can meet him again in BG City where you can either pickpocket the same sword again or gain it as a quest reward.
EXPECTED: Make the SW1H03 that's in the Quickitem 3 slot of ALDETH.CRE non-stealable. That or make two in his inventory- one that he's wielding (since he's presently wielding a simple short sword despite having a magic bastard sword in inventory) and one non-stealable (but droppable) that is intended only for award. That or make an ALDETH2.CRE to replace the one in BGCity and change the original ALDETH.CRE to wield a droppable/ not stealable SW1H03. You get the idea. ;-)