As soon as Raiden tells you to impale baraka with the sword you have to throw the sword (press the same button you did to pick the sword up) into Baraka.

You need to grab one of two weapons standing in the room and continue to fight using them until the "Test your might" sequence appear. After you beat Baraka in the clash, impale him by pressing the R2 button (PS2) or the white button (Xbox). Then you'll have to repeat the task with the second weapon.

Its actually the black button on Xbox

A little misprint Of course it's the black button, the same you use to pick up the weapon.

after u fight baraka (the part where he's on the other side and shooting things at you) there will be a cut scene and baraka is trying to kill you and he will hit sumthing and there will be a sword..there will be 2 swords and what u have to do is fight baraka with them and weaken him enough until a test ur night thing comes up successfully do that and then raiden is gonna say now impale baraka with ur sword just press the interact button and ur character will throw the sword at baraka impaling him..u have to do it again with the other sword so repeat again what i said then raiden is gonna say impale baraka again and finish him off..impale him with the interact button and then u should be able to do a fatality..hope that helps