There is a point where I allow the player to type in a custom phrase, which I assign to a string variable (let's say Phrase). I want to be able to search this Phrase string to see if the player typed in any specific words.

For instance, let's say I'm looking for "sword", "wand", and "shield". I want to use a function to search the Phrase string for any of these terms. If the function finds any of the words I'm looking for, I want it to return true so that I can execute a unique event based on the matching string.

Additionally, how can I condense my if statements for this function? For instance:

if (Phrase [contains] "sword" or Phrase [contains] "rapier" or Phrase [contains] "stabby thing") {
(do sword-related thing)
}

Is there a way to condense all those or's into one thing?

take a look at the 'String Functions' section/category:

http://docs.textadventures.co.uk/quest/functions/#string

and also in using list/dictionary VARIABLES:

http://docs.textadventures.co.uk/quest/functions/#list
http://docs.textadventures.co.uk/quest/functions/#dictionary

in particular:

'Instr' and/or 'InstrRev'
'Mid' for then getting that found string if need be
'replace' if you need to replace one string with another
'LengthOf' for getting the length of a string
'Split' and/or 'Join' for converting between strings and stringlists
'StartsWith' and/or 'EndsWith' can be useful as well, if you got/are-using a good naming/labeling system

using list/dictionary VARIABLES as alternatives for long 'if' Scripts (lots of 'else ifs', or, lots of use of 'and/or' operators)
'foreach' and 'for' with lists/dictionaries
'ListCountains' and/or 'DictionaryContains'
'ListCount'

I'll let you to try to figure out how to use these on your own, but if you need help, ask and I'll help you out with it

It is a bit more advanced, but IsRegexMatch would do it too. Also, use LCase on the text the player types to make it case-insensitive.

if (IsRegexMatch ("sword|rapier|stabby thing", LCase(Phrase"))) {
  do stuff
}

Thanks! This should be perfect. I'll come back if I have anymore questions.