Great Demon Sword (Speculative) is the 38th sword created by The Master Blacksmith, Zero.
Zero presumably put it on the black market.
It is unclear if either Koosiam or Heart Heater acquired it on the black market but they were both present during the exchange of the sword with money from Sad Smile.
The sword was stored in a Magic Circle in the lower levels of Castle Cobalt and it's magical energy was used by Sad Smile and his Dark Magicians on test subjects to turn them into Zombies.
The Sword apparently has a strong curse which Koosiam believes is the curse of a Great Demon. This was confirmed by Sad Smile who was able to pick it up without any trouble. 
The exact nature of the curse is unknown.
Hardcore Leveling Warrior broke into the lower levels of Cobalt Castle and bound the dark magicians that were looking after the sword, leading to the magic circle surrounding the sword to be broken when its energy went 'crazy'. The magical energy of the sword exploded and its from absorbed the power of the test subjects with its black core.
The monster created climbed to the top of Cobalt Castle but was dfeated when Hardcore Leveling Warrior took out its core, the Great Demon Sword.
Notes & Trivia
- The actual name of the sword has not been revealed and it is referred to as "The 38th Sword of The Master Blacksmith". It is refrerred to as The Devils Sword in Webtoon and it can also be translated as The Demon Sword.