I am seeking an old story with a vaguely medieval setting.

The main character is a knight loyally serving his queen. He is sent to spy on the neighboring kingdom which they've heard may invade. His guide is an attractive young woman who is a native of that land (and, I think, was the one who brought news of the threat they posed). The plan is for him to allow himself to be captured, as it is that nation's custom to remove either the penis or testicles of spies and then make them serve in the harem, where he can gather information. The decision on what to remove is made at a public spectacle where the man is stimulated by a woman; if he cums he gets a penectomy, if he holds out he is castrated (which is perceived as better, as it is less frustrating when surrounded by beautiful young women). The woman who served as his guide is selected to stimulate him, she gets really into it, and he cums in her and thus loses his large cock.

Does anyone recognize that story and, if so, is it here?

I don't know, but I remember a similar story on here somewhere where a guy is a spy and goes to work for the opposition to collect information, knowing that all who serve in the unit he's to infiltrate are castrated. So he knows that by taking the assignment, his balls are going to be cut off. I'm not remembering the name of that one right off hand.

I think you mean The Test by an unknown author.

https://eunuchworld.co/s1597

I have it in my favs...

Yes, that is precisely the story. Thank you, KA.dick.