You can actually check out from distance the Excalibug on Pits of Inferno on a determined place, but unfortunately the quest is most likely a lore allusion incorporated on the game mythology due to a certain story that happened on the early years of Tibia. Back in the day, the famous Magic Longsword was added (illegally, as sources tell) in an obscure "quest" and was later removed since it wasn't intended to have such overpowered weapon available to be used. It seems that the famous Excalibug was born as a legend from that incident, as a reference to the bug that permitted a 80 attack sword (now reduced on the last known exemplar of it) enter in game. Pretty cool, isn't?
The quest gave by the King is most likely another lore reference.
You can check out the full list of mentions of it in game on this link: https://www.tibiawiki.com.br/Excalibug (some portuguese text, make sure to enable your browser to translate the page if you don't know this language).