Tear of the Golden Dragon

Ancient History

It's said this sword was created when Golden Great Wyrm was corrupted from powers beyond this world and was forced by their hand to kill its brothers and sisters. Standing above their dead bodies he cried for 7 days and 7 nights until he died from sadness. However his tears was full of corruption as he was coming back to his previous self - like sweat. Leaving his body so he could die free. This enormous amount of corruption needed to corrupt Great Wyrm was stored in the soil of the mountain.    

Silver Mines

Many, many centuries later, family of dwarfs came from other continent, its name is lost in history. They called themself Silverforged and became really famous and long living clan. They went to eastern mountains and started to build shafts. Its said they found large veins of silver. After few decades they mined into air pocket of air and pool of liquid gold. Dwarfs though its some kind of storage from Underdark, so they stole it and didn't gave it a second though.  

Cursed gold

When dwarfs came with forever liquid gold to city, everyone from clan though it was cursed gold that can never be molded. They tried for many, many years to mold it. However this gold didn't want to mix with anything. They tried silver, bronze, platinum, zinc, palladium, everything they knew. However all what happened was, this gold turned to water and became worthless.    

Elvenkind

  After many tries, from pool of gold, there was less then few bars left. Dwarfs lost their interest and stopped caring about it. This was also time when dwarfs started to trade with elvenkind. Elvenkind find great interest in forever liquid gold and bought it from dwarfs for great sum of gold, which dwarfs saw as great deal - it was worthless for them at this time.  

Dragon's Blood

When Dalyor the Pillar of Sun, king of Elvenkind at the time, bought the gold, he commanded to his best blacksmith to figure out what magic it hides. This is also why we know about the dragon tears. Elvenkind of the time was enormously powerful in discovering secrets and forging from magical and mysterious materials. During this period of time most artifacts was created. However, blacksmiths found out the only material which can be combined with these liquid golden tears can be blood and bones of dragons. This was one of the reasons what lead to Great Purge of Dragonkind.        

Manifestation of Evil

When elvenkind gathered enough material to start crafting a weapon - a sword, which was ordered by Dalyor the Pillar of Sun as gift for his son, elven blacksmiths have written the following in their memories:

With every hit of our hammer we feel him. The Great Old Wyrm crying. We feel every tear dropping on the stone and soaking into the soil, as every hit of our hammer drops onto to-be-sword. We also hear sounds. It call itself The Great Old One, however its not a dragon
...
It speaks to us when we go to sleep, it's giving us advices how to forge the sword, how to make it stronger, lighter. This entity knows a lot about blacksmithing from rare materials, it doesn't want anything in return but we feel it. Its powerful and scary entity and it's power is beyond our understanding.

  Later this kingdom of elvenkind became corrupted and fall. All elves living in Seldarin's hills in Embernam comes from this civilization however we don't know much about them.    

Demonic Owners

We don't know much about owners, however there are points in history where swords shows and then disappear again. We know about Elmaris the Terrible. We have short article from servant describing his lord:

...
He is demon, he came from Abyss itself. Our ancestors sinned and thats why we must be punished now. We are in war against every kingdom, against every being in this universe. Even slightest offend leads to death, you don't even have to anything. Just a glimpse of bad word and you won't see next day.
...
Today we executed 79 people, tortured 126 and mutilated 398. Most of them simply was "evil" as our Lord said. Few of them forget to appear at quarter-birthday of Decimalphos. Thats goat of our Lord. Every day he is more crazy and more cruel.
...
We lived in Hell. Now we are just failing to survive in the Abyss. Our Lord lost the sword. It simply disappeared. It was guarded by 25 men, in Lords bedroom. The next second, sword was gone. We think even the sword was too good for our crazy Lord. This happened last Usmalir, since then 4 days passed and 3241 people was executed.
...
Angels and gods helped us! King is dead! He couldn't live without his sword so he killed himself.
...

*Usmalir is ancient elven name for 5th day of the week, meaning "Three remaning to full eight".   Then we know about Morden Ukrutný.    

Aftermath

It's said that last owner was Grumm, who followed evil deeds. However its said he was killed by group of adventurers. Sword was not found since then.