Sword Etiquette 刀作法

We were practicing Shiho Giri when Sensei indicated that would begin class.  We went to put our swords back on the rack, but Sensei stopped us and said that it was fine to bow in with your sword, provided that you placed it on your right side with the blade facing inward (the pommel / tsuka gashira  is about level with your knees).  Having the blade facing out, or on the other side means that you are expecting an attack and are on guard.
One interesting exception is if you have an Iai Wakizashi/ Sho to, it is all right to leave that in your Obi, but this does not apply to fukuro shinai Wakizashi/ Sho to.