Hi!

If i attach Sword of Morthond on a gondor ally (example: Denethor leadership) he gains Outlands trait. What about if i attach also Sword-thain and becomes a hero? Does it loose the Outlands trait?

The character will indeed lose the Outlands trait.

Constant abilities—like both of these cards have—aren't really applied "one at a time" (as opposed to what happens when you have multiple abilities with the same trigger condition/timing). i.e., it's not like you go, "OK, I resolve Sword of Morthond first, granting this ally the Outlands trait. Now I resolve Sword-thain, making this ally a hero!"

Instead, constant abilities are, well, constant and continually adjusting to changes in the game state. In this case, Sword-thain's effect is detected by Sword of Morthond's effect, functionally shutting it off.

Sadly all the "attach to ally" cards use the wording "attached ally" for their effect and cease to function with Sword-Thain. But they don't cease to be attached, so if you moved Sword Thain to another ally with Bartering, it would start working again.

Most of the heroic attachments are the same way, and would cease to work once Sword-Thain is gone. The exceptions are ones that affect things *other* than the character, such as Asfaloth or Legacy or Durin. The only ones that attach to a hero but then reference a character are Warden of Anor, Raven Winged Helm, Arod (to cover the Legolas ally), Windfola (to cover a non-existent Eowyn ally), and Glamdring (to cover the Gandalf allies).

1 hour ago, dalestephenson said:

Most  of the heroic attachments are the same way, and would cease to work once Sword-Thain is gone. The    exceptions are ones that affect things *other* than the character, such as Asfaloth or Legacy or Durin. The only ones that attach to a hero but then reference a character are Warden of Anor, Raven Winged Helm, Arod (to cover the Legolas ally), Windfola (to cover a non-existent Eowyn  ally), and Glamdring (to cover the Gandalf allies). 

One somewhat amusing case is Dark Knowledge, which fails to (negatively) affect willpower if the hero is de-knighted, but can be continued to be used for its triggered effect.

Thank you!

I assume, then, that a combo of Defender of the West and Sword-thain doesn't allow for a rotating hero akin to the saga heroes? 😕

Nope

12 hours ago, player3351457 said:

I assume, then, that a combo of Defender of the West and Sword-thain doesn't allow for a rotating hero akin to the saga heroes? 😕

Correct, since in the part about the first player "takes control of" it clearly says "ally" and not "character".

Ceorl with Sword-thain is an expensive way to simulate a rotating Saga hero. (Add a Song of Travel to him so he can pay for himself…)