The shadow sword has the same Melee attack bonuses as a black 2h sword, with additional Magic attack and defence bonuses. It also has a faster attack (3.6 second interval as opposed to the usual 4.2 seconds). The shadow sword is required for a Master clue step.
If you happen to lose it, return to the room in the cave where you fought Bouncer's ghost. (In order to reach the actual room, you will need to crawl through a small crack on the south wall.) There will be a new, friendly ghost that is willing to give you back your lost sword. A ghostspeak amulet must be worn to talk to the ghost. A ring of visibility is not required to reclaim the shadow sword, as the ghost is not invisible.
Note: Even with current death mechanics where untradables are kept upon death, the shadow sword does not follow this logic and is not kept in your inventory/equipment unless its one of the three items kept on death or a +1. It will also not appear on the ground and you will have to follow above to reclaim it.