This article is from the Final-Fantasy and other Square Soft Games FAQ, by email@example.com (Nick Zitzmann) with numerous contributions by others.
It's a structural wreck in 1000 AD. A carpenter in 600 AD can help out,
but he doesn't have any tools.
Go to the inn in 1000 AD, and ask the carpenter there for his tools.
Take the tools to the carpenter in 600 AD, and have him repair some of
the structure. When he's done, go in and defeat the ghosts in the way.
Keep heading back, recruiting more help, fighting ghosts, going back,
etc. until the whole place has been fixed.
Now, take Frog to the room you reach from going to the far left at the
entrance. In this room at the end will be Cyrus's grave. Cyrus's soul
will talk to Frog, and the real power of the Masamune will be revealed.
The Northern Ruins will now be called the "Hero's Grave".
While you're at it, take time to search around for treasure. The Moon
Armor, as well as other extremely powerful items, can be found here.