Kingdom Hearts II I'm going out on a limb here, but.....

How does Sephiroth know about the Keyblade?
When you go to battle Sephiroth, there is a short conversation.
He mentions "So that's a Keyblade."

Does he know something more about them?
He said a Keyblade, so what do you think?

 

It seems to me that many people in the Kingdom Hearts universe knows of the Keyblade. For example, King Triton knew about it.

 

...

 

Yeah, he probably heard about it. I can imagine it.

Sephiroth: *pins someone to wall with Masamune* Do you know any useful information?
Random Dude: No! All I know is about the Keyblade!
Sephiroth: Tell me.
Random Dude: It is a weapon of legend bla bla bla (we know the rest.)
Sephiroth: Interesting. *kills random dude and walks off*

Yeah, I can imagine that.

 

Ansem: I'm simply someone from the dark. I had an encounter once with a 'Keyblade'. Perhaps your good friend Cloud has mentioned it?

Sephiroth: Yes, he has.

Ansem: Would you like to find one?

I could also see that as a possibility.

 

Maybe ther'll be "Another Report" on this one.

 

Everyone know about the Keyblade in Kingdom Hearts, it's a legendary Weapon, Leon knew of it so Sephiroth most likely knew it aswell, what i don't understand is why Sephiroth didn't say about it in Kingdom Hearts 1, he was in a tournament but he could of said something.

 

Another scene where he sqeezed out of somone is:

Sephiroth: tell me any useful information Yuffie or cait sith gets it! (dangles cait siths kitty cat bodyin the air)
Yuffie: No! Don't hurt him I now a bit about thekey blade it is the ultimate weapon and is a popular legend.
Sephiroth: Oh I didn't know that thanks.
Yuffie: How didn't you know you dumb grandpa!
Sephiroth: (crushes Cait sith into powder and walks away) Be thankful that wasn't you!

But he could have squeezed info out of somone and he didn't get a good look at it in KH1 cos he should have been constantly attacking you non-stop.