When Balian is fighting the Muslims, in particular fighting them on top of the battlement in which the Moorish flag is being waved, he battles them to let Saladin know that the battlement was not taken. In the proccess, a Moor comes down with his sword on top of Balian's chain mail covered arm in a slicing motion. When Balian later shows the wound to the doctor, his arm shows a deep cut wound. Chain mail is designed to stop the cutting edge of a sword from cutting human flesh. It does not, however, stop one from bruising, which would have been more acceptable in this case.
Another slipup is that the sword cuts Balian across the arm, and yet when he reveals the wound, the cut runs up and down the arm.