This appears as a high quality long sword, made of shining steel, and accented with brass and silver. It will radiate strong magic, if tested. The sword is +1 to both Hit and Damage in most circumstances. Against undead and demonic creatures with physical forms it is +2. Against ghosts and other spectral undead specifically, it is +3, and capable of hitting such creatures even in their intangible states.
The curse comes in when fighting with non-undead creatures for the first time. Whenever fighting with such creatures, the wielder of this sword must roll d100 upon making any successful strike; there is a base 25% chance that the blade will become spectral, and the wielder is left weaponless in the middle of battle. The handle still seems solid enough in this form, but the blade will only be like a ghostly thing, passing through solid matter as a wisp. The blade is still useful against undead and demons in this form, but has no value against living creatures. When the fight is over, the blade will return to solid form. Fighting with it again brings up the 25% chance of going ghostly.
If the wielder of the blade should die while using it, whether it's in spectral form or not, that person will become a ghost themself, haunting either the spot where they died, the sword and all its future wielders, or the party as a whole (GM's choice).