This appears as a well-made long sword that radiates strong magic if checked for. Early tests will show that it endows the wielder with +2 to both Hit and Damage.
When first used in actual combat, the wielder must roll a Saving Throw vs. Magic, or else see their opponent(s) as their party-members, and vice-versa. In other words, the illusion will make their friend take the enemy's form, and the enemy take their friend's. If the victim then comes to their friend's aid, they will end up attacking their friend, instead.
The illusion includes auditory sounds, such as voices, but will not endow any kind of special language abilities. (The victim might hear the enemy shouting at them, saying that they're attacking the wrong person, but who is so gullible as to believe such lies?) Enemy creatures that cannot normally speak, but which do so in the fight, claiming to be a good friend, might take the victim aback, or might provide a clue. The exchange of appearances does not include special powers or items, so any use of these might also imply what's happened.
The illusion can only be Dispelled in combat by a 10th Level spellcaster or higher, otherwise it fades when the fight is over. Unlike many cursed items, this sword may be abandoned at any time. It may not be clear at first what the source of the turnabout illusion was, so the victim might not feel the need to be rid of the sword for a while.