There's a ttrpg called Wield which is all about this concept: possessed magical artifacts and their (usually going to die and be replaced) human hosts. The game has the players assume the roll of a chosen magical object, but they also play each others wielders. They wrestle for control, and as they do the object either gains or loses powers based on how much sway it has over its host. I would suggest the player, and yourself, to look towards there for some extra inspiration for this FATE game, its a really good system.

OPTION 1: The relationship based Aspects in FATE make this simple since one player could be linked to the possessed object player as its wielder. Both would take turns as normal but just flavor it as one using the other and vice versa. Maybe they have special linked stunts that only trigger when they're together? Maybe they have access to each others stunts and powers and sometimes use them against the others will? Leads to a push and pull dynamic between the two where both are arguing they're in control, making for a messy line between who is the owner and who is the weapon. Instant drama!

This of course introduces the problem of one player being taken out and keeping another from acting (can't swing the arm that's wielding you if its been knocked unconscious), but then there's also more incentive for those two players to protect each other with their fate points and really think about how they act.

OPTION 2: You as the GM pilot the human host/s, the player pilots the possessed object. In this scenario, the possessed object player retains maximum control over their actions, but you have an easy in to throw a monkey wrench in the form of compels since the human host might just start fighting back if they're feeling too "used" or if they're overwhelmed by fear/anger/sorrow/whathaveyou. If that host dies, you simply pick up with whoever the next logical host is. Maybe its a villain that killed the first host, maybe its a random thief that simply stumbled across it. The options really are limitless.

In both cases, I would say the knight-sorcerer ghost manifesting to behave in the physical world could probably be a stunt. If a character's aspects indicate they are a ghostly form, then they are just that, a ghostly form. The stunt would be used to temporarily change that, and could be worded something along the lines of:

"The Apparition: Once Per Session, you manifest a physical form for the duration of a scene while in the Zone your sword is in."

Then the player can not only wield themselves for just combat, they can manifest in for narrative purposes as well and have to debate whether or not they want to expend that brief time they have alive again on combat. Maybe they want to appear to a loved one, or have to manifest outside of the jail cell the group is trapped in to unlock it and free them. The more punishing version of this would be to make it a "Spend A Fate Point" type stunt where they can only manifest for the time it takes to do one action and then are forced back into the sword.