The Haunted Memento was from the pre-WotLK "Scourge Invasion" event during the end of BC. It was a potential item drop from any of the invading undead mobs. Having the item in your inventory will give you the "Haunted" buff and a Scourge Haunt that will follow you around, occasionally causing your character to /cower for a moment. The Scourge Haunt will be dismissed if a companion pet is summoned or if the player enters stealth but the buff will remain. The item used to be able to be tossed to other characters, but in Patch 4.2.0 this ability was removed; it is a rare item and Blizzard did not want players to easily lose the item. (I believe this is how my sister, Alayea, ended up with the item - someone accidentally threw it to her just before she logged out. Players could also lose the item if the player to whom they tossed it already had a Haunted Memento in their bags because of the "unique" property, or if the receiving player had no empty spot in their bags.)
Read the Wowpedia article here.
Edit: The item was greatly nerfed with Patch 6.0.3. Instead of having the shade as a near constant companion, it now only spawns for 15 seconds every several minutes. Bashiok said the change was implemented to relieve stress on their servers, as the Warlords of Draenor launch was anything but smooth. (Source)
Having been a bug since the item was put into the game, Celestalon has confirmed that for 6.0 the Haunted Memento will no longer cancel eating. (Source)
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