The first sentence is awkward. I’d recommend changing the beginning to Before I could ask for it, because I assume (perhaps wrongly, but I do have the character flaw of being a bit rational at times) the narrating character wouldn’t ask for the sword after it was handed to him/her.
The comma after said needs to go away. However, this is an example of the right way to write a character speaking and smiling. She says her dialogue with a smile; she does not smile her dialogue.
Before I could ask for it, she handed me my sword. “Be careful out there,” she said with a frightened little smile.