Okay... what this code does is Max out whatever it is that you have Equipped; by max out, I mean, all item stats, item health, and talisman levels are at maximum. In addition, it also does two more things: first, it allows you to chose what kind of item it is, i.e., item name (upon reloading) and its associated power; and second, it allows you to choose all the talismans you want attached (up to 8, even with swords).
ULTIMATE SWORD CODE
B216F554 00000000
6216F554 00000000
200001C4 000000XX <-- Item
100001EA 00007FFF
100001EC 00007FFF
100001F0 00007FFF
100001F4 00007FFF
000001fb 00YY00YY |
000001fe 00YY00YY |--- Attached Talismans
00000203 00YY00YY |
00000206 00YY00YY |
0000020B 7F7F7F7F
0000020E 7F7F7F7F
10000210 00007FFF
d2000000 00000000
ULTIMATE CLAW/ARM CODE
B216F550 00000000
6216F550 00000000
200001C4 000000XX <-- Item
100001EA 00007FFF
100001EC 00007FFF
100001F0 00007FFF
100001F4 00007FFF
000001fb 00YY00YY |
000001fe 00YY00YY --- Attached Talismans
00000203 00YY00YY |
00000206 00YY00YY |
0000020B 7F7F7F7F
0000020E 7F7F7F7F
10000210 00007FFF
d2000000 00000000
There are basically some rules to using the code:
1. By using XX, all Weapons and Arms can take the names of all other Weapons or Arms; Swords can take the powers of claws and other swords; Claws can take the powers of Swords, Arms and other Claws; and Arms can only take the powers of other Arms.
2. Regardless of what XX is, the item will belong to the slot of what it originally was; so if you pick up a Sword and Specify the XX of a Claw, upon saving and reloading, the Item will have the name and power of the Claw, but remain in the Sword slot; hence, the 'Claw' will have no Def (since Swords have no Def), but you will still be able to Equip an Arm with it. Also, it will have only three talisman slots (read rule 3)

.
3. Regardless of how many talisman slots a sword appears to have, you can apply up to 8 talismans to it by using YY. Only the first 3 will show up when you check, but the game will register all 8.
NOTE: Considering the fact that you can apply up to 8 talismans, by using the Weapon Spirit Talismans, you can create 9 weapon power Swords and Claws, or Claws with 1 Arm power (With XX as an Arm) and 8 Weapon Powers. It is unfortunate that the game has no Arm Spirits =(
XX: ITEM VALUES
01 --> Steel Claw
02 --> Demon Claw
03 --> Giant Claw
04 --> Quandry Claw
05 --> Vampire Claw
06 --> Sword Defender
07 --> Baku Claw
08 --> Falcon Claw
09 --> Cat Claw
0A --> Exorcism Claw
0B --> Weapon Breaker
0C --> Dragon Claw
0D --> Claw of Ouryu
0E --> Haja Blade
0F --> Shingan Blade
10 --> Asura Blade
11 --> Zantetsu Blade
12 --> Musou Blade
13 --> Houshin Blade
14 --> Kagutsuchi Arm
15 --> Orochi Arm
16 --> Izanagi Arm
17 --> Izanami Arm
18 --> Enma Arm
19 --> Susano-o Arm
YY:TALISMAN VALUES
00 --> Empty Slot
2C --> Rekka
2D --> Gouka
2E --> Mikagami
2F --> Jinrai
30 --> Reppu
31 --> Hayate
32 --> Yami-Uchi
33 --> Kaishin
34 --> Mikiri
35 --> Suimin
36 --> Ashikase
37 --> Kou'un
38 --> Fukugen
39 --> Fukusei
3a --> Zoufuku
3B --> Suitai
3c --> Ten'i
3d --> Kikan
3e --> Fuuma
3f --> Tsukumo
40 --> Steel Spirit
41 --> Demon Spirit
42 --> Giant Spirit
43 --> Quandry Spirit
44 --> Vampire Spirit
45 --> Defender Spirit
46 --> Baku Spirit
47 --> Falcon Spirit
48 --> Cat Spirit
49 --> Exorcism Spirit
4A --> Breaker Spirit
4B --> Dragon Spirit
4C --> Ouryu Spirit
4D --> Haja Spirit
4E --> Shingan Spirit
4F --> Asura Spirit
50 --> Zantetsu Spirit
51 --> Musou Spirit
52 --> Houshin Spirit
Have fun experimenting =)