After fighting Letho the first time down next to the bath in the Elven ruins near Flotsam I noticed that Geralt had only his silver sword left. So I went back and used to medallion to check for anything I might have lost in both of the rooms. Alas, nothing.
Is it normal to be stripped of the weapon one was using during the fight?
Geralt loses his (steel) sword in the cutscene at the end of the fight. It does not automatically go to your inventory, but you should be able to find it on the floor. I'm not sure why you're not seeing it there. Perhaps you have to pick it up right after the fight?
Edit: I just played through that part again and it seems that the sword on the ground is not highlighted by the medallion. You'll have to look for it yourself.
I lost my equipped sword (steel sword) after the fight with Letho. I can't comment on whether you'll loose your silver sword if you have that equipped. But yes, immediately after the fight, I used the medallion and the sword was highlighted on the floor, just to the left on the lower level before the exit. I'm glad my first instinct was to use the medallion because I had no idea I had lost it until I became encumbered with items a couple of minutes later!
Like most items left on the ground in the Witcher 2, I expect after you leave the area the items cease to exist.
If you were using the best sword at the time, the jagged blade, then once you check your inventory for swords you will see it in there. Other words you pick up a generic Cutlass sword that you may confuse as your original. You can tell if it was your original by if the rune slots by the swowd are full or not.
You have to return there later in the next quest.
When I came back to the scene of the Letho fight, I found my jagged sword on the ground. No worries
