Obviously, this achievement can only be obtained on Iorveth's path during Chapter III. When you are given the choice to rescue Phillipa or Triss Merigold during the quest "The Spellbreaker", you must choose to rescue Phillipa. You will have to help Iorveth escort her through the sewers, defeating Rottfiends along the way, to the top of the tower which contains the chest holding the dagger. You will have to face a Draug mini-boss battle, but fear not as it is not nearly as hard as what you're expecting. Quen and place Yrden when you need to, hitting the mini-boss when you get the chance, and you will take the mini-boss down very quickly.
The achievement will unlock upon finishing the quest completely, so don't freak out if it doesn't unlock right away upon obtaining the dagger.