Here is a simplified history of what the party has learned about Cervantes.

Background
Cervantes was a pirate that lived about 200 years ago. He was the scourge of the seas in the ancient days, and was rumored to have supernatural powers relating to his famed magic sword, the Soul Calibur.

One day, he captured a noblewoman named Maria from a northern country called Rowan Dee, intending to hold her for ransom. One of Cervantes' lieutenants, Michael, fell in love with Maria. He fled with her, but not before replacing the Soul Calibur with a fake. Michael worked with a gnome named Wunderbar to break the magic sword into a number of pieces and hide them throughout the known world. Wunderbar also placed traps and puzzles in the hiding places.

Eventually Michael's treachery was discovered and he and members of the crew loyal to him were trapped in one of the hiding spots. Cervantes was not aware that the sword was split into pieces, however, and he was unable to recover his sword, so he left Michael there to die.

Michael and Maria's love for each other was so great that it continued even unto death, and both became ghosts. Maria was living in the town of South Luka, and her spirit continues to haunt its streets. Michael's restless spirit, trapped in the cave in the foothills of the Rusty Mountains, caused the entire cave to become a spawning ground for undead.

The Sword Pieces
Brecaryn has a map that shows the possible remaining locations of the sword's location. Before disappearing, Beeblebrox told Brecaryn that it's important that she get the sword pieces in order to prevent anyone else from doing so.

• The Motley Crew inherited the first piece of the sword - half the sword hilt - from Lashtal & Chyekk's group. That hilt was found in a swampy pit near Betaya.
• The Crew found the second half of the hilt in a pirate den in one of the smaller islands that surround the Isle of Dread. It's possible these pirates were descendants of the pirates loyal to Michael, or perhaps another rival pirate gang.
• The Crew attempted to find the hilt gem in the cave where Michael's ghost resides, but failed. It is thought that the Motley Crew's rivals, the Havoc Company, subsequently located the gem, but that is unconfirmed. Havoc Company was hired by an unknown employer.
• The Crew found another piece, half of the sword blade, in a cavern underneath a pyramid in the Great Desert. The cavern had been overrun by demons, which destroyed most of Wunderbar's traps. The party did not learn why the demons had taken up residence there.

Wunderbar
The Motley Crew encountered a gnome named Wunderbar working out of the city of Yokel as a magical blacksmith. Gnomes are long-lived, so it's possibly the same one that was allied with Michael.