The weapon is, in fact, a powerful vampire slaying tool that manipulates its owners into slaying vampires purely for the bloodlust of the sword itself, while having the user think they are fighting for a higher purpose. It was once in the hands of a vampire known as Kahil Grigesh. To atone for his actions against his own kind, he ventured into the Netherrealm and committed hara-kiri, ending his own life and trapping the sword.
It is there, however, that Ashrah discovered the sword and used it to slay many Oni until eventually escaping the realm.
Ashrah uses the Datusha as her weapon again in Mortal Kombat: Armageddon.
From there, the sword began compelling her to slay an unending amount of vampires, which brought her into conflict with Nitara.