MasterSword: Source is, and has always been, a pipe dream.
It will never be released simply because there is no actual development team dedicating even the slightest amount of time to it.
I'm fairly sure it's been dead for years now. The only reason people still remember it, as opposed to Era of Legends (the original spiritual successor to MasterSword) is because MS:S has "MasterSword" in the title.
Sure, a Source version of Edana has been made. And a Source version of Thornlands, not too shabby looking. Both by Rickler (author of great MS:C maps such as aluhandra2, oceancrossing and shad_palace).
There's also a shortsword model, skinned and all, and a giant rat model, also skinned (but not properly rigged).
I know this because I have seen it...
And what has been developed since then? Maybe five prop models, tops, and a handful of really half-assed maps. Maps that make you think "this is baby's first Source map" when you see them. And you can see them; these frighteningly amateuristic maps (Source versions of Calrian's Ruins, the Plains of Daragoth and the Haunted Forest), along with Edana and the Thornlands, were packed in an embarrassing MS:S preview...
I strongly advise against downloading that preview though. If you want to see how Source maps can actually look, download:
...anything else involving high production values, quality control or at least solid mapping (look here)
So what has happened since then, really...?
Rickler left years ago and he was the only talented mapper the MS:S team has ever had. Rumor has it he became bitter at Valve for still not having released Half-Life 2: Episode Three, or Half-Life 3. And I can't blame him. Speaking of which, it is still more likely that we'll see Ep3 or HL3 before MS:S though.
Anyway, when Rickler left, he took the old MS:S site and FTP with him... MS:S hasn't even had its own website for years now.
If, by some miracle, MS:S actually does get released, I fear it will not be good. I gather the people over at ModDB and RTSL will be the judges of that.
I'm betting we'll see the Source 2 Engine first though. Which will make MS:S completely pointless, by the way.
So brush up your modding skills and prepare yourself for MS:S².
...or just stick to MS:C. Even though it has some massive flaws and seriously unbalanced gameplay (both ways), it also has lots and lots of content. Content MS:S will never have.
That's... A little more pessimistic than I'd like to be, but probably not far off the mark, sadly.
I do think with one dedicated coder it could have gotten off the ground. There's enough maps and models in the Source dev archives for a framework game, but the only coders that ever touched it didn't stay around for long - some of them didn't join with the best of intentions and few were competent.
Back then, with even a basic framework, I suspect enough modelers and mappers would have hopped on board to get the thing rolling - and if the coder burned out at that point, there might have even been a replacement in the pipe.
At this point, however, there just aren't that many modders, and Valve did its damndest to end all interest in working under the Source engine by repeatedly disabling every other mod out there. It was pretty clear that any mod you made, regardless of how spectacular or popular, was doomed to die if it went out of development for more than a handful of months.
And now, with so many gab-bag GUI-based game development kits out there, Source just isn't popular anymore. It never was easy to work with to begin with, in many ways being the worst of both worlds, in terms of being both chaotically raw and unnecessarily proprietarily cooked.
I suppose even Goldsrc has some adherent enthusiasts today, but Source engenders no such nostalgic loyalties, as it never was particularly loyal itself.
Meanwhile, MSC has nearly two decades of bloat under its belt. I never expected MSS to catch up with that, but it would have been nice for it to have some future beyond its ancient engine and restricted platform, and a fresh start. We never expected Goldsrc to last this long, and really, at this point, it seems it may outlast Source.
...Though, like I said, MSC too has hit a wall that no one able seems willing to help it climb.
But, maybe when Source2 (or whatever they are going to call it - hopefully not "Vapor") comes out, just maybe, it'll raise some interest again.
(Hell, I've had six different people contact me trying to launch Wizard Wars: Source.)
If I do recall there have been some times where coders have suggested a different engine, which they would code in, but was really fast to get shutdown by the team at hand.
Maybe it shouldnt be in source if someone pops up, since MSC Has a lot of content, Lore & Nice gameplay mechanics. It could as well go smoothly in an unreal engine or so.
Just my cents, I am still ready to finnish music and sound effects if a persistent team pops up. Cant really do much with music on its own..
Well, yes, we've had tons of attempt to do MasterSword under dozens of different engines and even platforms. As I've said time and again, I'm entirely willing to throw bones at and even provide web and file space to any such effort, but alas, none have really gotten off the ground.
Tends to be one guy with a dream who, occasionally presents a few items of promise, but invariably burns out.
As I've also said elsewhere, the primary reason for Source (or Source2), was the amount of bleed over skills, and perhaps even media. The Source SDK isn't that far removed from the HL1SDK (and actually includes huge swaths there of). Mapping is very similar, modeling is somewhat similar, and the tools are readily available to anyone who owns Half-Life1 (even if they are a pain to configure).
Back in the day, every HL1 modder took to Source like moths to flame. But alas, Valve, despite so much of its success being built on the modding community, and so many in their employ being former modders, more or less abandoned said modding community, and thus that window has all but closed.
(Really, it's almost like the modders who got jobs at Valve decided to burn the bridge behind them in order to keep their jobs.)