Tyrfing is the weapon specifically designed by IGA to troll the player.
At least that's how I felt.
I always figured this was basically the point. Similar to the Alucart items, it's meant to be cruddy and is also an example of the game's odd sense of humor.

But I also always appreciated the Tyrfing, if only because it's one of the many references to all sorts of mythos they crammed in there. SotN is a fun game for 'spot the mythology', and the Tyrfing is lifted directly from Norse. Here's the wikipedia description of it:
"...The Dwarves made the sword, and it shone and gleamed like fire. However, in revenge they cursed it so that it would kill a man every time it was drawn and that it would be the cause of three great evils. They finally cursed it so that it would also kill Svafrlami himself."
http://en.wikipedia.org/wiki/TyrfingThe SotN item description is "Cursed dark sword", which keeps it accurate enough! Pretty random but neat detail to put into the game.