Check the "Where do I start" thread on here. I posted some links that should answer all your questions.
With a file you have to have some way to "anneal' it. Thats making the hard steel soft enough you can drill, sand etc. That means heating it up till it reaches critical temp (a magnet will no longer stick to it) then letting it slowly cool back to temp. I made a small brick forge like in the $50 dollar knife book but some folks do it in an charcoal fire burying the blade in the coals. You then cut, file, sand everything thats not a knife and then heat it back to critical temp but now immediately dip it in oil (ATF, olive oil, used motor oil) and it will resort back to as hard as it was before as a file. At this point it's too hard to sharpen and is brittle so you have to temper it. That means putting in an oven (old toaster oven) and heat it to about 350 for a couple hours and slowly let it cool. Check with a file to see if bites into it. If it does fine if not put back in the oven at say 400 for a hour and try again. Once you get it to a point you can file it you'll be able to sharpen it. Now finish it and put scales (handle materials) on it and if your like most folks start designing your next knife. Good luck and post pics here.