He was killed presumably while trying to get the Masamune on that mission to also get the Hero Medal back from the Frog King, since the battle takes place right outside the Masamune's cave.
What??
No he wasn't! He obviously did obtain it, as per what Masa & Mune say when you challange them:
Masa: They're tough!
Mune: Only Cyrus made it this far!
The real question is at what point in time did all of this really happened.
Yes, the battle does indeed takes place at that location. However, does this necessarily mean that he had
just finished fighting Masa & Mune for it? Also, this is when the Masamune gets broken into two pieces, in that very fight against Magus:
GLENN: Cyrus!
The sword...
The Masamune!
OZZIE: Gyah ha ha...Is THAT the best you can do?! Without your sword, you're nothing!
Ozzie's remark seems to indicate that Cyrus had indeed, already been the wielder of the sword for at least some time. As opposed to having just recently acquired it, a few moments ago.
As for the legend of the 'legendary hero', who 'supposedly' could be the
only wielder of the Masamune and would save them from an overpowering evil, it had to have originated from somewhere, right? Or rather from
someone, having used it for a considerable amount time in a very righteous, honorable and selfless way.