Sometimes spirits are attached to physical objects, and sometimes the energy of a material can form a deliberate consciousness. Your sword's consciousness or subtle energy might just take that form of energy. Give respect to what and who you work with and you could have a nice working partner. This is a belief (or variant of) called Animism; physical energy has corrosponding subtle energy, and materials like stones, crystals, plants, water, and other things have spirits.
As for sensing things, you are simply new to consciously processing more energy, and until you grow used to the flow, it's going to have some side effects. Once you work more with it, you'll be able to comfortably work with the energy, as well as learn to put your subtle senses on a back burner and not have it be something going off all day. Ground, center, and shield if you'd like. Take a break from Magickal things and have intervals where you focus on purely mundane things.
For the dreams, write down what you remember in the morning (or whenever you wake up) and meditate on it later. There is a shamanic technique from the Aboriginals called Dream Reentry where you can visit your dream again while in a trance and ask questions or converse with people or objects from the dream.