So this driving me mad. This was an older animated / Anime movie. It involved 2 kings battling it out at one point. One with a sword for good and one for evil. The Hero was a typical young fighter who ended up with the light sword vs a typical over cool and evil guy who ended up with the dark blade. I remember the evil guy had a Dark Elf as his help who actually loved him and he was to tunneled visioned to see it. The hero of course had a regular elf and both were female. There was various dragons in it that were TITANIC. The mad 2 was a red dragon who had 2 sets of wings like a dragonfly and a Golden dragon. The end of the movie had the good elf to be sacrificed to raise this all powerful thing ( I thjnk ) but the hero ended up with Both sword and combining the power of the dark sword and light destroyed the evil thing. It's best I can do
The final battle that is being described is definitely from the Record of Lodoss War OVA (1990) in the 13th and final episode. This series was based on and inspired by Dungeons and Dragons, hence the colossal sized dragons of many colors (Gold, Red, Green, Black etc) that appeared in the series. Along with other iconic creatures like goblins, orcs and even a Lich!
Parn was the archetypical boy who wanted to follow in his father's foot steps (ie become a knight), wore his father's brown armor throughout the series. He was the childhood friend of Eto, the priest(cleric). Along the way they meet other archetypes of the D&D world: Gim, the veteran dwarf fighter, who in the beginning teaches Parn in how to fight; Deedlit, the Light Elf, good with nature magic and the bow; Slayn, the sorcerer
As for the final scene with the magic swords that embodied Good and Evil, the Gold and Red Dragon battle and Deedlit's sacrifice ritual to raise the Evil Goddess of Destruction Kardis: Parn and friends battle thru the last dungeon which was an underground temple to Kardis. Each remaining member of their party stays behind to confront their classes' typical nemesis. (Eto confronts a huge apparition is the one that is most memorable to me)
Parn, before he can rescue Deedlit, has one last showdown with Ashram (the knight in black armor wielding the Evil magic sword with the red eye in the pommel along with the Dark Elf girlfriend Pirotess). After defeating Ashram, Parn dual wields both magic swords to defeat the evil mage Wagnard. This is one of my favorite final showdown scenes ever.
Based on the Dragons and the Elves:
Could it be Record of Lodoss War? The characters and Dragon-sized fit, I just don't quiet remember the final showdown and related swords.