Now, so you aren't confused, The Ashbringer doesn't just refer to the sword. The Ashbringer also refers to Alexandros Mograine, the man who used the sword in battle. I'm going to approach this laying the events out chronologically, because going through it in the order things were implemented in WoW would just confuse us all even further.
During the Second War, Alexandros Mograine was among the ranks of the Silver Hand, and fought alongside them at Blackrock Spire. During his time there, he farmed many an orc for fun and profit (or saving the world, either/or). When Master Looting the drops, he came across a dark crystal upon one of the orcish lieutenants. Simply touching the crystal caused great damage to his hand, so he hid it and kept it secret for years, considering it a true embodiment of evil.
The crystal remained hidden for a number of years, until the dawn of the Third War, just as the undead began to rise, but before the war actually broke. Mograine called together other members of the Silver Hand, and presented this crystal to him. Surely, since an artifact of pure evil exists, its polar opposite must exist? An artifact of pure holy power, a manifestation of the Light! The Undead wouldn't even be an issue, then.
His buddies essentially called him a dummy and started Holy Shock spamming the crystal. Much to their shock, this massive infusion of holy power changed the crystal down to its very core. No longer pure, soul-sucking evil, it had become the very thing they were looking for. Pure Light. Mograine decided then and there that they would use this crystal as a weapon, use it for the Light. They would forge it into a blade: The Ashbringer. And so they did, and designed it to represent their kingdom, Lordaeron. You can see the L upon the guard and hilt of the sword.
Now, there's a very, very strong theory as to what that crystal was. It is just a theory however, and even if it wasn't, Blizzard enjoys yanking our chains about the Ashbringer and changing their minds on things. The theory is that the crystal used in the creation of the Ashbringer is the remains of a Naaru. The lifecycle of that crystal matches the lifecycle of a Naaru perfectly: A cycle of Light and Void, the holiest of holy, then an inevitable 'death' into Void, pure soul-sucking darkness. Once the 'dead' Naaru has regenerated, they return to Light. The origin of the crystal matches as well: An Orc from Draenor brought it to Azeroth. Draenor was the site of the Oshu'gun's crash that maimed and killed the naaru D'ore. This is further reinforced by what happened next.
While Alexandros Mograine became a warrior of legend during the Third War, laying waste to any Undead that came near him, Lordaeron was still more or less in ruins. The Silver Hand disbanded during this time, and it was actually Alexandros' new order that held the little Lordaeron territory that hadn't fallen into the hands of the Scourge. That new order being, of course, the Scarlet Crusade. Unfortunately, the Crusade had been infiltrated from the beginning.
Saidan Dathrohan, one of the first Knights of the Silver Hand, had been slain during the war, and his body possessed by the demon Balnazzar. Alexandros Mograine found enemies very, very quickly, though he was not aware of it. Kel'thuzad, who had been given dominion over the Plaguelands by Prince Arthas, became very interested in the Ashbringer as well. Slowly but surely, Balnazzar began to seed corruption around the Ashbringer, twisting the Crusade. More notably at the time, however, was the corruption of Alexandros' son, Renault Mograine.
Balnazzar swayed Renault over to his side, and then made a pact with Kel'thuzad. The two of them would set aside their differences to destroy the Ashbringer, a common enemy. Balnazzar, through Renault, lured Alexandros and his pocket healer Fairbanks to the front gates of Stratholme, where Kel'thuzad had gathered the bulk of the Scourge forces in the Plaguelands. Battle was joined, and it is said the Ashbringer killed undead numbering in the thousands. At some point, his pocket healer had been dragged to the ground and was buried beneath a mound of corpses.
The Ashbringer was eventually exhausted, both the man and the blade spent, and Alexandros lost his grip on the blade. Renault took up the blade from his father, and cut him down. The blade fell into darkness, and Renault cast it aside, unable to wield the sword as it was.
That is the other portion that supports the naaru theory: The blade fell into Void once again after an extremely trying and exhausting battle, turning thousands of undead to ash singlehandedly, in one battle. It had completely drained itself, and there was nothing left but Void.
From there, Kel'thuzad took the remains of both Ashbringers and brought them to Naxxramas, where Mograine was risen as a Death Knight and then wielded the fallen Ashbringer.
That is what we know is absolutely 100% true so far (though the theory mentioned remains a theory), but there is another element to that may or may not be true. It is actually something that has been played out and witnessed by players in game, but may have been stricken from the records. The Corrupted Ashbringer, until Wrath launches, is able to be acquired in Naxxramas from the Four Horseman, of which Mograine is currently a member. If a player enters the Scarlet Monastery with the Corrupted Ashbringer equipped, the Crusaders kneel in reverence of the Ashbringer. Upon entering the Cathedral proper, Alexandros Mograine's spirit enters as well, via the blade. He strikes down his betrayer of a son, and Fairbanks crawls out of the closet the Crusade locked him in to tell you a little story.
At the end of this story, Fairbanks states that the Ashbringer you hold is beyond redemption. However, there's a second Mograine son in Outland that can forge a new one. That turned out to be entirely untrue, and the Ashbringer questline was never moved forward in The Burning Crusade. We haven't met a Mograine yet in Outland yet, and we won't. There was a theory that David Wayne was the missing Mograine son, but that turned out to be false.
Mixed in here and there throughout the four years of WoW's life, Blizzard has tossed us many Ashbringer references, nods, hints, teasers, and jokes, but all of them have led to dead ends. Among those dead ends are a book by Nat Pagle, Prince Tortheldrin's supposed trading the location of the Ashbringer for the Head of Nefarian, and countless NPCs name-checking the weapon at random. All signs have pointed to... nothing.
Wrath of the Lich King spoilers ahead! If you do not want to see spoilers of Wrath of the Lich King or the upcoming Ashbringer comic, stop reading! Only what is written above is important to you.
As of the Wrath beta, we more or less know that the scene in the Scarlet Monastery is null and void. Quest and NPC flavor text imply that no, a second Ashbringer was never forged. Darion Mograine, Alexandros' second son, went to great lengths to cleanse his father, and free him from the grip of the Scourge and the Corrupted Ashbringer. While he was successful at freeing Alexandros, he himself fell prey to the Scourge, and became the new bearer of the fallen blade. In the end, Tirion Fordring actually ends up the bearer of the blade in a purified state.
What happened between Naxxramas and the events of Wrath of the Lich King is currently unknown, and I assume that will be covered in the upcoming comic. Certain elements of the Scarlet Monastery scene may prove true still, but it seems a majority of it has been tossed out. For people following this storyline, it's a bit frustrating for sure that it keeps being delayed, rewritten, and teased, but hopefully in the end it will prove to be a better story because of it. Things are looking quite interesting in Wrath so far, and that new comic just around the corner. I suppose we just need to wait and see, hm?