Oddly, Nightmare is able to equip this sword in Soulcalibur II, despite the fact he is the embodiment of Soul Edge in Soulcalibur III and Soulcalibur IV. This is based on the fact that Siegfried is possessed by Soul Edge at this point in the game series, and as such his human form (Nightmare's third outfit in the game) is able to wield the soul blade, not necessarily the 'Azure Knight' costume that is default for Nightmare in Soulcalibur II.
Siegfried's version of Soul Calibur in Soulcalibur III becomes the alternate version of Siegfried's base weapon in Soulcalibur IV, albeit with a darker shade of blue.
In Soulcalibur II, this version of Soul Calibur looks a lot like Xianghua's version of Soul Calibur, but both of the wings are formed into one and one part of the split blade is much larger than the other.
According to Soulcalibur IV's official strategy guide, Soul Calibur in this form (specifically, the version in Soulcalibur IV) is not just a mere sword, but a pure, crystalline embodiment of raw power.
This weapon is also in Soulcalibur V, but is only usable by a CPU-controlled Siegfried in Legendary Souls and Quick Battle (he also has his SCIV P1 outfit).
This particular version of Soul Calibur is the most expensive weapon in Soulcalibur III.