Don't use sandpaper as Nathan said. If you can identify where the contact is that is causing the problem you might be able to scrape a little bit of wood out using a hacksaw blade or part of an old bandsaw blade with the end ground to a chisel. This will naturally catch on any high spots. A slight bend on the end of the hacksaw/bandsaw blade will make the chisel end engage a little bit better if necessary. If the contact area(s) are too large for this you can either try to take the sheath apart or sand the blade down a fuzz. You could also take a cheap file and if necessary grind it thinner from one side to make it slim enough to reach the areas you need to adjust. Wish I had a better answer, the hacksaw blade trick has worked for me but it's a tedious problem either way.
Coating the blade with paste wax and then inserting it repeatedly into the sheath (after it dries) can help identify the areas where you have unwanted or too much contact. The wax will rub off those areas and make them somewhat visible on the blade, then use a flashlight to look into the sheath and identify the corresponding surface inside.
I have seen a couple of cases where the glue squeezes out of the joint on the inside and causes unwanted friction, if you're really lucky this might the problem in your case. Running a tool of some sort down the inside of the joint can't hurt. Make sure whatever you put into the sheath is clean though, once you get unwanted particles in there they can be damn hard to get back out.