Arthur has a sword of power. Arthur also has a "sword" of "power"—sometimes a sword is not just a sword, and sometimes power refers to power in the sack. Ooh, baby.
Come on, guys. It's a freaking sword. It's so phallic it's not even funny (oh wait. Yeah, it's still snicker-worthy). It's long and hard. It's what divides the men from the boys. It's basically the most important implement a man in the Middle Ages could have.
So young Arthur, who is on the cusp of manhood, finds a sword sticking out of a stone. He pulls the sword out of the stone and bam: he's the king of England. What's going on here?
Oh, just something that's rife with Freudian meaning. Wart takes a very phallic-looking thing from an orifice that is keeping it tightly in place—that stone is really vaginal, folks. This is a double-whammy of meaning. First of all, it symbolizes birth: King Arthur is "born" as the sword is removed from the birth canal-like stone.
Second of all, it represents becoming a manly-man. Wart removes this phallic sword from its very female stone, symbolizing the fact that he is ending the period in which he is nurtured (even though he doesn't have a mommy, he's cutting the proverbial apron strings) and beginning his tenure as an adult male with a big ol' sword.
Oh yeah, and Arthur's sword of power has a very important sheath that it goes with. The sheath, naturally, is a bit of vaginal symbolism. Merlyn tells Arthur the sheath is super-important—Arthur cannot be wounded as long as he has the sheath with him.
He may as well have nicknamed the sheath "Guenever," because that's what it not so subtly symbolizes. As long as Guenever is at Arthur's side, he does pretty much a-okay. But once Guenever has been torn from him, Arthur bites the dust.