The Legendary Swordsman event occurs when an individual warrior gains a certain amount of honor in battle (I don't remember exactly how much). A really cool video of a samurai performing a kenjutsu kata plays (he's inside a dojo with a misty outdoor view in the background). This event occured in the original STW as well as in WE/MI. Once this event was triggered, you could build a Sword Dojo and its subsequent improved versions, and could train No Dachi swordsmen once it was completed.
The Kensai unit was introduced in STW WE/MI, so if you played the original then you wouldn't have seen it.
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