Shortly after obtaining the Umbra Sword from the Hero of Kvatch, Clavicus Vile found that the spirit contained within the sword was too powerful to control, even though as his Daedric artifact it was technically a part of himself. Umbra was able to cut Vile and steal some of his power, greatly weakening the Daedric Prince. The spirit left the sword and took the form of a humanoid with pitch black eyes.
The Umbra spirit fled with the Umbra sword to one of the cities in Vile's realm to prevent being trapped again. There he remained until he felt an influx of souls coming into Vile's realm, which was originating from Tamriel, specifically from the Ingenium which held the Ministry of Truth aloft in Morrowind.[OOG 1]
Umbra realised that the rift the Ingenium was creating between Tamriel and Vile's realm would one day be wide enough for the Umbra sword to pass through. On the day Ezhmaar Sul destroyed the Ingenium, the rift widened sufficiently and Umbra threw the sword into Tamriel, while drawing Sul and Vuhon into Vile's Realm.
Vuhon made a deal with Umbra: he would create a new Ingenium, which would tear away a piece of Vile's realm they could use to escape into Tamriel. Umbra agreed, and the Dunmer and spirit merged as one being, placing their soul into the new Ingenium. Though Sul escaped, the new city called Umbriel tore its way out of Vile's realm and appeared in the skies off the coast of southeastern Black Marsh in 4E 40. It was summoned there with the aid of Imperial Chief Minister Hierem and the An-Xileel, who used the Lilmoth Hist tree to communicate the the Umbriel-Hist to "call" the city from Vile's realm.
Umbriel still existed inside a "pocket" of Oblivion, and Vuhon needed to take the city to White-Gold Tower to emancipate the city from Vile. However, he decided to take the city north into Morrowind to find the Umbra sword, as it could be used to destroy both Vuhon/Umbra and the Ingenium.[OOG 1]
Sul and Attrebus Mede arrived where the sword had landed first, the ruins of Vivec City. They found the sword gone, with tracks leading away from the area to the northeast. As they prepared to leave, Umbriel arrived and they were captured by Vuhon's undead minions.
They were able to escape and, with the aid of the Daedric Prince Malacath, discovered that the sword had been taken by a Dunmer noble named Elhul Sathil to Solstheim. However, without the Umbra spirit to stabilise it, the blade now drove whoever touched it mad, and Elhul's family had imprisoned him within caves beneath their castle.[OOG 2]
Sul and Attrebus were able to defeat Elhul and take the sword, then used it to travel to Vile's realm of Oblivion. Vile and Barbas spoke with them, and agreed to send them to the Imperial City where Umbriel was now heading. Sul and Attrebus made their way into the city and battled Vuhon. Sul was able to stab Vuhon with the sword, but it had no effect as his soul was inside the Ingenium itself.
Despite Vuhon's efforts, Attrebus was able to plunge the sword into the Ingenium, and the blade re-absorbed the soul and the Umbra spirit. Vile then possessed Attrebus and attempted to steal his soul as well, but Sul attacked him and forced the Prince to stab him with the Umbra sword. Sul then fell backwards onto the Ingenium, causing it, his body and the sword to turn into smoke.[OOG 2]