rusted sword is an ambush tool?

By mbm, in 2. AGoT Rules Discussion

It is written "any phase - kneel 1 influence to place rusted sword…"

so can i attack someone and during the challenge kneel 1 influence and win the battle?

Indeed, you can use Rusted Sword's put into play effect to make the difference. Keep in mind your opponent(s) will be able to take actions too, though.