Both the Cursed Shield and the Ragnorak Sword/Esper can be found in Narshe. Ragnorak is in the basement of the Weapon Shop and the Cursed Shield is in one of the houses in the upper-left part of town (if I remember correctly). You can choose the sword or the esper; the esper will teach you Ultima, and the sword can be gambled at the Coliseum for the best sword in the game. The Cursed Shield must be battled with 255 times to turn it into the Paladin Shield, which will also teach you Ultima.