when i use weapons they get more damage over time but when i find better weapons they are worse than the one im using, i just found a dwarven sword and its worse than my steel. any explanations?

are you using smithing to improve your weapons? if so then that would explain it. beyond that im just guessing as i dont have the game yet.

You can improve items a couple of tiers above where they start out. So if you crafted each one as much as you can the dwarven one would end up better

That is cool...

That sounds awesome!

I always hated being forced to use a new ugly weapon because it had a higher attack rating. (Well not exactly forced,but you get the point)