Let me get this fact straight: You were both on the same account via two different Knights on this same account and you, Bloody, lost your axe? Now you can't log in?
Right.
Ignoring this bullshit (which is confusing in trying to make any sense of it), I suggest that you wait it out if your character cannot log in. There's lag and so you'll be looking at the screen with the "Connecting. Please wait" notice.
About your axe... give up on it and buy another one. Only donated items will be returned to you.