Which is, again, why Murphy doesn't tell Harry she's bringing the Sword. She recognizes that he's keeping things close because he knows he's being watched; ergo, she doesn't blithely give away her own trump card by telling Harry.
Yes. I've seen this brought up as Murphy not trusting Harry, but Harry blatantly tells her that he's keeping things close to the chest—even when they're alone, in her house, behind a threshold. Aside from which, there's really no reason to tell Harry she's bringing the Sword anyway; it's not like he's going to use it. In fact, she brings out the "rocket launcher" and deliberately avoids calling it that; she just says it's something that'll make the Genoskwa think twice.
It also prevents Harry from looking at Murphy and saying something stupid, like, "Murphy, now! Use the Sword!" in a moment of crisis.
As for Murphy "put a bullet between Gen's eyes in a twinkle," recall that when Harry shot the Genoskwa, it was using a gun that was bigger than Murphy and the Genoskwa didn't even seem to notice. Nicodemus and the Genoskwa both looked at Murphy holding a rocket launcher and were confident they'd shrug it off.
Oh, and while Murphy is taking that totally ineffective shot at the Genoskwa, Nicodemus is going to murder the hell out of her. And then kill Harry anyway.
Even worse than that, look at the position she was holding Nic in. He was on his feet, with the Sword pointed at his throat. Murph was across from him, also on her feet. If she shifts at all to draw a gun—across her body, mind you—she loses the position, and Nic gets free. Nic is
really fast; Michael considers him an even match against himself—a guy who is a professional Sword-guy. Part-time, maybe, but he puts in a lot of hours. Murphy is good—really good—which is why the ruse had some semblance of verisimilitude at all—but nobody's good enough to beat Nic twice. Hell, the moment she tensed up to kill him, he wriggled out of the danger, grabbed her wrists, and wrestled the Sword away from her.
Murphy was in an untenable position. There was not quick fix that would have gotten everybody out alive, and believing that Nicodemus was telling the truth about not wanting Harry dead requires ignoring who Nicodemus is, Harry's conclusions and basic common sense.
I mean, what do you seriously think happens if Murphy doesn't arrive with the Sword? Nicodemus to shrug and go, "Oops! Well, that didn't go how I thought. Sorry about that, see you at the hide-out, no hard feelings!"? The idea is absurd.
And if she didn't use the Sword, but instead relied on standard weaponry, Nicodemus would've slaughtered her. It wouldn't have even been close; the Sword helps keep Anduriel at bay. Without it, Anduriel is free to shadow-stomp her.
Even if she was able to beat him, it wouldn't have done lasting damage. He still had the Noose during the fight; he takes it off when he "surrenders"—which is what I think actually makes the Sword vulnerable, too. If he had kept it on, and Murphy knew that, I think the Sword would have remained unbroken.
Murphy's choice -- a choice she arrived at because of Butters mucking things up and her and Harry's decision to save him -- was to lose the Sword or lose Harry.
Butters deserves a big chunk of blame for the whole situation. He didn't have Faith (yuk-yuk-yuk) in Harry and Murphy's good intentions. It's only when it's restored that he redeems himself.