I believe that “Arthur” is a conflation of two kings:
When the usurper to the throne, John I, exiled the boy-king Arthur from Island of Great Britain to the Continental half of the Kingdom of Britain, the Continental subjects likened him to a mythical warlord from centuries earlier.
But it is this latter Arthur under whom knights reconquered the City of Barcelona, defeated the Black Knights and reclaimed the Holy Grail. And this is why it is from the French from whom we receive such written stories, such as La Morte d’Artur and de Boron’s Merlin.
This also provides the great ambiguity of Merlin. Geoffrey of Monmouth combined the Byrthonic prophet and madman with the Christian military commander, Ambrosius Aurelianus. Later medieval writers resolved this ambiguity by making him a Christian mystic “of the Order of Melchizadek.” Although the meaning of that has faded from common knowledge, that is the name of the Catholic priesthood.
And yes, the Holy Grail is not lost at all; it is in the Cathedral of Valencia, Spain, where it has been since it was brought there by Saint Laurence in AD 279. It is a red agate hemisphere, which has been adorned in later times with bejeweled stem and handles, and has been confirmed to be roughly 2,000 years old (2,200 +/- 200), and from Palestine. “Graal” is a word, meaning cup, derived from Provencal, the dialect of the part of France which borders Spain. The Moors (”black knights”) misunderstood the appelation “the cup of everlasting life,” and perceived the halo around it as indicating it was magical.
Although the oldest tales of the “Holy Grail” (by Chretien de Troyes and Robert de Boron) are inconsistent with the history of St. Laurence and the rescue of the sacred relics of Rome, in all cases, it is identified with the Chalice of the Last Supper. The ambiguous descriptions (both as a chalice and a bowl) actually fit the Sancta Caliz, in as much as it was very bowl-like, but made more similar to a familiar, later Catholic chalice by the addition of the stem and handles. Likewise, the paintings of the Holy Chalice, found in churches in the Pyrenees, predate de Troyes’ work, but conform with his description.