Osric truly didn't believe that a Legendary-level divine sword would shatter upon contact.
Even if it was the personal sword of the legendary William the Obliterator, so what?
William the Obliterator was only a legendary swordmaster from the ancient times, not a high-ranking god-king of the Divine Realm. Could his personal sword be some kind of extraordinary artifact?
Even if William the Obliterator stood before him, he would still not believe such nonsense.
Legendary figures who haven't appeared for hundreds of thousands of years are likely long dead, and it's unknown where they perished.
If one really had the strength of an Absolute Deity, would they die?
There are many legends about William the Obliterator.