Angle relative to the x, y, and z axis mainly. I also need to track the object in space, mainly the distance of the tip and base of the sword from the target. Sensors can be placed on the sword.
I was thinking mounting gyroscopes on the sword, but I still can't figure out distance. I looked a IR things, but they seem to be able to only find the distance of any object, not specifically the sword. Maybe radar would work, but I am doubtful of its accuracy.
To get the position and orientation in a 3D space your best bet might be the camera from a Wii controller. The camera on the end of the Wii controller measures the relative location of two IR sources on the tracking bar under the a TV screen (or your target). The position of the two IR lights in the image allows the Wii to calculate distance and angle.