Here's what the documentation for Baldurdash FixPack v1.12 says:
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Mordenkainen's Sword Amulets & Mind-Control Magic Susceptbility Fixes
Files SWORD01.CRE and IPSION.ITM; edited versions of the creature definition for the summoned magical weapon called Mordenkainen's Sword, and item definition for a specialized Greenstone Amulet. Originally in Shadows Of Amn, Mordekainen's Swords were equipped with this Greenstone Amulet, a device that prevents Fear, Confusion, Feeblemind, Charm, Hold, Stun and several other magical mind-control effects. However, there were two problems with this. First, the amulets were not marked as undroppable, which means players could pick them up if the sword "died," and also sell then and buy/steal them back so that their single charges would turn into fifty. When BioWare was advised of this, the "fix" for Throne Of Bhaal was to mark the amulets as undroppable, which meant that any player that had picked one up previously and kept it had it permanently stuck either in their amulet slot or in an inventory slot. Only Shadowkeeper or some extreme hex-editing could change this.
Secondly, the Greenstone Amulet does not do what it is designed to do. It must be activated through the Use Item button if it is being worn by a player. The Sword does not have the facilities to do this, so the Greenstone Amulet did nothing whatsoever.
To resolve these issues, the Greenstone Amulet (ISPION.ITM) file is included reflagged as droppable for those players who still have one stuck in their inventory. The Mordenkainen's Sword creature file (SWORD01.CRE) no longer wears a Greenstone Amulet. Instead, the immunities that the Amulet was supposed to provide are now encoded directly into the creature definition.
Note that it was confirmed on the Interplay WebBoard by David Gaider that the original problem with the dropping amulets was a legitimate bug with this item.
The update to this fix as of 2001-Sept.-22 restores the AI script to the Sword that it was given in Throne Of Bhaal which prevents it becoming an uncontrollable enemy.
Many thanks to Beige Tangerine for doing the original bugfix for Shadows Of Amn and donating it to my collection!
You can visit Beige Tangerine at
http://www.geocities.com/beigetangerine/
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@Deadalready: If I'm reading this correctly, then the original (unpatched) Mordenkainen's Sword does not have any protection because the Greenstone Amulet is not activated. Maybe the problem you're experiencing isn't caused by a patch, but rather by NOT having the patch.