The madness continues. Onward!
One day, Sheogorath, the daedric prince of madness (or "madgod" as his demented followers had taken to calling him) decided it was time to manifest his powers in an artifact, as all daedra are inclined to do. So he wandered into the palace garden to look for something to imbue with his powers. He picked up an alocassia fruit. "I could make a Fruit of Insanity!" he cried to himself. "Or maybe bake it into a pie. Insanity Pie? A Pastry of Paranoia?" He bit into the fruit and chewed thoughtfully before tossing the rest over his shoulder. Taking a few more steps, he came across a large fungus that was oozing a black, tarlike substance. Sheogorath took some in his hands and marveled at the disgusting stickiness. "Silly Slime!" he shouted to no one in particular. "Or Super Slime! A mortal could coat himself in some and be gifted with some of my powers! Ha!" He shook his head and laughed, as the slime in his hands was burned away by supernatural flames. "In all seriousness, though, I can do better than that." He walked past bushes with psychedelic flowers, a pond filled with giant, spiny frogs, until he finally came to an old, gnarled willow tree that looked weathered but otherwise normal…and therefore out of place in Sheogorath's whimsical world. Its dark boughs were twisted into surreal shapes, and at some point lightning had scored a deep gash into its trunk. It was amazing it was still alive, and Sheogorath smiled. He could identify with this tree, being old and misunderstood, and clinging fiercely onto life even though it was insane to do so. Yes, this would do nicely as the base for his object of power. He took hold of one of the tree's straighter branches and tore it from the trunk with no more than a tug. He crafted the wood with his hands like it was clay, and within moments he was holding a curious staff that bore a wide-mouthed face on the handle.
"I dub thee the Wabbajack," Sheogorath said in a lordly tone. "What's that?" he held the face of the staff up to his ear and listened intently. "You want to know where I got the name? Well, my dear, I must've dreamed it up at some point. Or it could be the sound you'll make when I beat someone with you. I can't quite be sure. Now, let's go try you out."
He went into the mortal realm to test his object of power. First he came across a band of bandits in the mountains. They ran at him with swords and axes, but he merely pointed the Wabbajack at them and they burst into flames. "That was a bit predictable," Sheogorath noted, scolding the staff. Then he pointed it at the bandits' horses, which were tied up a little ways away. They turned into wheels of cheese, falling haphazardly to the ground. "Much better!" Sheogorath laughed. Next, he traveled across the mountains and into a valley where he found a farm. He pointed the Wabbajack at a cow, and it became a young lady who was naked and looked very confused. Then he pointed it at a chicken, and it froze solid in a block of ice. At this point, the farmer and his wife rushed out to confront Sheogorath, so he used the Wabbajack on them. They became a pretty pair of pigs.
"Well, I do declare you've satisfied my expectations," Sheogorath said to the staff. Then he blessed the cow-lady with intelligence and creativity, and gave her ownership of the farm. She thanked him and became a devout follower of the Madgod, and made a nice living selling bacon to the neighboring villagers.