Why wont this award sword?

I don't think that you can get services from a local script, so you have to use both a normal script and local script.

Here is what the scripts might look like:

--Normal script in ServerScriptStorage
local MarketplaceService = Game:GetService("MarketplaceService")
local Func = Instance.new("RemoteFunction" , game.ReplicatedStorage)
Func.Name = "PromptPlayer"
Func.OnServerInvoke = function(PlayerToPrompt , productID)
    MarketplaceService:PromptProductPurchase(PlayerToPrompt , productID)
end

Here is the local script:

local buyButton = script.Parent
local ProductID = 20518668
buyButton.MouseButton1Click:connect(function()
    game.ReplicatedStorage.PromptPlayer:InvokeServer(ProductID)
end)

Now you have to process the "receipt" to award the sword. Create a separate script and put it in ServerScriptStorage.

local MarketplaceService = game:GetService("MarketplaceService")
local ds = game:GetService("DataStoreService"):GetDataStore("PurchaseHistory")
local sword = 20518668
MarketplaceService.ProcessReceipt = function(receiptInfo) 
    local playerProductKey = receiptInfo.PlayerId .. ":" .. receiptInfo.PurchaseId
    for i, player in ipairs(game.Players:GetChildren()) do
        if player.userId == receiptInfo.PlayerId then
            if receiptInfo.ProductId == sword then
                local Item = game.ReplicatedStorage.Swords.Sword
                Item:Clone().Parent = player.Backpack
                Item:Clone().Parent = player.StarterGear
        player:SaveBoolean("HasSword" , true)
            end
        end
    end 

    ds:SetAsync(playerProductKey , true)
    return Enum.ProductPurchaseDecision.PurchaseGranted     
end

If you want the player to always have the sword, add this normal script to ServerScriptStorage

local Players = game.Players

function onPlayerAdded(Player)
    if Player:WaitForDataReady() then
        if Player:LoadBoolean("HasSword") then
            local Item = game.ReplicatedStorage.Swords.Sword
                    Item:Clone().Parent = Player.Backpack
                    Item:Clone().Parent = Player.StarterGear
        end
    end
end

Players.PlayerAdded:connect(onPlayerAdded)

If this doesn't work, please tell me.