If I remember aright, there's a note in the code regarding this. Somewhere along the lines of "mwahahahaha I'm so evil, I'm gonna give you this awesome sword to rely on, and have it disappear on you, hopefully in the middle of a tough fight spawned because of this sword".
If it's starting to become a frequent occurance, it's quite possible that your copy of IVAN has corrupted itself somewhere along the way. Grab a fresh copy and see if you still get those problems. Bones and saves can be copied over.
Since he can break even adamantine beartraps, the best way to do it is with banana peels. You get plenty of them for free, and it takes a lot of bananas to fulfill the requirement to challenge him in the first place. You just have to be careful that he doesn't kill himself via self-decapitation, but usually you can take off all 4 limbs without too much trouble.
Sometimes the sneaky bastards can be hard to find, especially when there's some other type of spellcaster who can make them invisible. Lord knows I've missed them when running tests in WM, with everything visible.