So, next session my players will likely wind up receiving one item each made by chaos-tainted dwarfs. The items will all have some degree of corruption which will affect the characters over time, but one or more of them might be cursed in a more immediate and tangible way.

I prefer to not introduce new rules that do not use the existing rules, so I am wondering if there is some way to use cards from the game to represent the items curse? Or maybe some other mechanic I haven't thought of that would work well for representing a curse?

I am thinking of attaching an Insanity, Disease, Effect or Critical card to the item. Or maybe a miscast card? I haven't taken a look at those in a while.

Judicious use of chaos stars or purple dice is a good idea.

I consider the "Crimson Rain" item card be cursed, so you could look at that for inspiration. You could create a similar sort of item.

Your idea of attaching an insanity/disease or other card could work great as well. You could have it activate on a chaos star, so that it's not constantly active.

As for the cursed items, here's few ideas:

Cursed item could produce extra Challenge or Bane (even couple of them). And if it is really major cursed-item, extra Chaos Star. Also with them you can add that penalty secretly to the results and let the players just wonder why something went wrong.

Wicked part could be, to introduce players working magical item, with some benefits. But, it also produces some secret penalty. For example you have a magical item with extra damage against something. Nice, but it also produces penalty to some other skills just by wearing/holding the weapon. Like any social encounter. It would be real mystery to players how suddenly the person starts to fail social encounters and this might not be easily connected to the weapon.

Hm, some good ideas here. I particularly like the idea of rolls failing that should be successes.

However, the problem with many rules like that is that it becomes a rule I have to keep of track of and remember to keep with the game. I prefer if everything about the characters is represented on their character sheets or cards, so that if we pack the game away for a long time there isn't anything lost. The payers are generally pretty decent at keeping player knowledge and character knowledge separate.

The items I am going to give them are going to use the dwarf runes. They each get to roll for how good an item they get and then draw 1 or 2(on a really good roll) dwarf runes of an appropriate type. So the special rules of the magic item will be right there on a card the player has. Which makes it really easy to remember.

I took a quick look at the miscast cards. (No one in the group plays casters btw) Most of them have one or two effects listed based on number of chaos stars rolled. For example:

Chaotic Tremor
Choas Star: You fall prone and suffer 1 Fatigue

2*Chaos Star: Characters engaged with you also fall prone.

This is the kind of card I could attach to the item. So that whenever the item was in use and the player rolled one or more Chaos Stars, that cards results applied. I might just pick out all the appropriate miscast cards and have them draw a random one that gets permanently attached to the item.