I'm not a dreamologist, but I do recognize some common themes in your dream. Like at the beginning when your attire was all wrong and your sword was broken. I've had many dreams like that where things just weren't right and couldn't be fixed no matter what I did. I don't know what the purpose of that sense of inadequacy is, but I'm sure it's based on the brain's psychological processes.
It's nice that you used the dream world to reunite with someone you knew in reality. I have dreams so real and vivid about people I know, that I actually write it off as a genuine memory, as though it really happened. And why not? A dream is just a memory of a series of events, just like any other memories.
Thank you for the comments Roger. What you said about "the brain's psychological processes" certainly rings true in my experience. I am a school teacher and almost always have some kind of school anxiety dream at the end of summer/beginning of school year. I've talked to many other teachers and just about every one I've spoken with knows exactly what I''m talking about and experience the same phenomenon themselves.