The contributor @FeliniusRex is correct about the literal meaning of "naked sword", but in this case it looks like it is also a reference to the legend of Tristan and Isolde, which is a famous romantic story from medieval times.
In the legend, Tristan (a young man) is sent to another country to bring back Isolde (a princess) to marry his uncle, King Mark. On the journey, Tristan and Isolde fall in love and he runs away with her. Quoting from the link above:
The lovers flee into the forest of Morrois and remain there until one day Mark discovers them asleep with a naked sword between them.
In the legend, they have the naked sword between them because they are being chased by the King and they want to be able to defend themselves quickly if he finds them while they sleep. If the sword is already out of its scabbard and close at hand, it can be picked up and used right away.
In the book you are quoting, we have this sentence:
There is still so much between us, more than if a naked sword had lain between you and me.
Here the speaker is using this reference to the legend of Tristan and Isolde and saying that their bond is even greater than the bond between these famous and legendary lovers. You could paraphrase it as:
There is still so much between us, more even than between the famous lovers, Tristan and Isolde.