So, this has been bugging me for some years now. I vaguely recall seeing this on TV some 15-20 years back. It's either a movie or a series.
Things I'm pretty sure about
It's set in a high fantasy world, there are elves, dwarves and mages. The protagonist is some guy who gets a pretty large magical boulder which he can levitate by squinting at its center. He puts this boulder into a specially crafted sword with a hand for a pommel (which grips the boulder), gathers a party, and goes on some quest.
The main gimmick is the sword can be recalled as long as it's visible by squinting intensely, so the protagonist likes to literally throw it around.
The party included an elf archer at some point. While recruiting the elf, the following scene plays out: a blacksmith (for some reason in the middle of the woods) is hammering arrow tips, near him a hooded figure puts those tips on arrow shafts. Two punks come into the frame, pay the blacksmith two gold to go look at their busted wagon (it's implied that the point is to get the guy out of the picture), and start pestering the hooded figure about an archery competition.
The hooded figure ignores the guys for a bit, but then takes the hood off, revealing pointy ears. They then agree to an archery competition between the elf and one of the punks, tying two ropes around a tree, and competing to see who can cut the rope with a shot. The elf wins, but the loser insists that he's still the better archer, and challenges the elf to a duel. Ultimately, the elf shoots the punk dead, at which point the protagonist suggests the elf joins him on his quest. The elf accepts, most likely to avoid repercussions for the murder.
Stuff I'm much less sure about
I think there were a dwarf and a mage in the party as well, but the details are extremely fuzzy. I also vaguely remember the elf dying to a trap in some dungeon, but again I'm not too sure. Finally, I can vaguely recall that the stone itself was literally taken from the hands of the protagonist's dead father, and the whole plot is revenge-motivated.
Beyond this, I barely remember anything. I don't remember any names.
I also think it was pretty cheap-looking, probably a made-for-TV movie or series, and it didn't have the "Kevin Sorbo"-type feel to it, so I'm suspecting this was European in origin, but don't quote me on that. All the actors were pretty European-looking too, IIRC.
Does this ring any bells? I can't say this keeps me awake at night, but I am pretty curious, and I've spent many hours on Google in multiple sittings. TBH, my memory is fuzzy enough to believe I've thought this all up in a fever dream, but it feels real enough to keep searching.