Nintendo have been very sneaky with story telling in Zelda. Because it is the Legend of Zelda rather than the history of Zelda, Nintendo can pretty much get away with anything they write. The folk stories in the games are legends which are made up stories of possible historic events, which means there is no recorded evidence that prove such and such actually happened. If it actually did happen then it would be History.
If I remember correctly, in Ocarina of Time it was stated that the Master Sword was made as it was by the sages, it mentioned nothing about the Goddess, the Hero chosen by the goddess and the forging of the Goddess's Sword. Because we know that's not exactly what happened, Ocarina of Time told a Legend, not a historic event. If everything was recorded in the Zelda Universe then every game would be related through history, which would mess things up quite a bit as most Zelda games don't relate to each other. Because Nintendo doesn't plan out the story when making a Zelda game, they just make up stories within the game a.k.a Legends.