Title says it all..

Also.. why can you not improve Silver Swords AT ALL? O.o

Don't know about the silver, but I have Molag Bal's mace at Legendary, as well as Dawnbreaker.

You need to improve your smithing to 150+ using enchantments, potions, et cetera. ITs very well worth it, and it actually is possible to improve things past legendary. I improved my daedric sword for Legendary(132 damage) to Legendary (141 damage) They had the same 'legendary' status, but you could improve them past that.

The only limit to improving is your smithing skill. Keep finding ways to increase it, and you can keep improving. If you have the perk in smithing for the material, it's about 17 skillpoints per jump from legendary to the next level of legendary. Unperked stuff takes 34 smithing skillpoints per jump... thus the helper text ingame that says you can improve things twice as much with the perks.

-Loth

Dawnbreaker is ebony, not Daedric.
As for getting your smithing skill up, I go out into the wilds and kill as much game as I can, take their pelts, and bring them into town and make leather out of them. Then I just make piece after piece of Leather armor until I run out of materials. It's inexpensive and light, so it's fairly easy to get rid of and if you have other things you can do until the shop opens, you don't stand as much of a chance of being over encumbered. When I do that, I get a skill increase every 2 or 3 pieces, so it adds up pretty quick but your supplies diminish even quicker. You can get free skill increases and around a couple hundred in coin so I'd say it pays off pretty well.

Of the artifacts from the daedric shrines, only Ebony Mail can be improved to legendary without raising your smithing above 100.

Click the link in my signature to see which of the other artifacts and unique items that can be improved, and how much.

I got mines to legendary via

100 smithing
necklace of smithing +15%
notched pickaxe +15%
silverblood family ring +15%
Steel plate gauntlets of smithing +20%
and a blacksmiths potion +20%

Through enchanting you can get rings, necklaces, gauntlets and armour at 23% each. Plus the pickaxe and any potions used during enchanting and Blacksmithing, you can get it even higher.