Azad's justice system was run on the same lines as that of Dwarf Fortress
That's why so many of the enemies there wield hammers. They weren't prisoners, they were executioners.
The reason why the final sword in the first game can kill sand monster is
The same reason as you can kill the non-human sand monsters. It destroys their entire body leaving nothing for the sands to revive. The sword can destroy slightly damage walls in a single hit it is clearly absurdly powerful.