Dragon Buster II: Yami no Fuuin (1989)

Centuries ago, Dragons and Demons roamed the country and brought terror into the lives of all people. However, a local legend states that the Sword of Thruth can restore peace to the land. It turns out that the almighty weapon is kept by the most ferocious dragon who ever lived but this doesn't stop the young Carl from willing to take on the challenge. He is small but the best archer the land has ever seen!