I was just thinking now but the Elysdeon for some reason is like this for me
Elys = Alis
deon= Down
which means Alis Down or Alis passed her sword down. Thus coming to the conclusion for me the Elysdeon is Alys' sword just passed down through generation or stored. Which means the Nei Sword could be Alis' sword / Elysdeon.
And as the sword was put away during PSI and PSII, it stored the thoughts and memories of the protectors of Algo as they parted from there lives. Then it was transformed into the NEi Sword from the spirits within, however the spirits did not feel as if they needed to talk to Rolf, for they were sure of what his decision already was. Another thousand years passed and new spirits were added to the sword.
Now we have the Elysdeon. The sword is in it's final form. The spirits that dwell inside the sword know that the events are happening over again. They wanted Chaz to see all that has happened to make him know that he has to put an end to it all so the events never happened again. So they showed him some of their memories, reasurring him that he is basically the last hope.
So when Chaz and co. defeated PD, the souls in the sword were thankful that they can rest in peace, so they did one more thing as they figured out what was happening. The Elysdeon shattered, making a protective barrier to save the young group and went to rest in peace. Algo was finally safe. Too bad about Ragol though
