I have a few that come to mind:
The sword of methane detection
The hairy and smelly boots of con +1
and the vorpol c*** ring , yeah I don't remember who made that one or why.
That's all I can think of now.
EDIT: It seems I was slightly incorrect. It's actually the Girdle of Femininity/Masculinity.
Now, though, I feel bad for not participating in the thread. So here we go!
The Jukebox: This item was given to NPCs that accompanied the party for whatever reason the DM felt they should. They may be a guide or someone we were sent to find, etc. Whatever they were, they were not intended to be combatants. Instead of contriving ways for them to disappear when the $hit hit the fan (combat), The Jukebox was invented. When in posession of this artifact, the NPC was completely immune to any sort of attack or damage. They were also rendered unable to aid the party (small price to pay if you're an NPC!). It all started when we had a bard following us around. We'd had a rough combat or two and noticed that F'innigan (Drow game - apostrophe required in all names) was always unscathed. When asked how he got to be so "juke-y", he showed us his Jukebox. And that is how the legend was born. It's not over, however.
Eventually, one of our PCs died in combat. After the obligatory joking about how he'd have faired had he possessed F'innigan's mighty Box, he decided that he would simply take this NPC Bard as his new character. That lead to some obvious complications, of course, so it was decided that the mighty Jukebox must be somehow broken. But how to break such a juke-y item? Well, we would soon find out. In the next week's game, F'innigan came uncharacteristically alive with talk. We asked him what the problem was. He was holding his prized Box and shaking his head. It appeared as though it was broken. But how? When asked, ol' F'in explained that his beloved Juke was dead. It seems that The Jukebox gained it's power from housing a mysterious - and intensely difficult to capture - creature named, simply, a Juke. He had forgotten to feed it in the excitement of surface world travel and it succumbed to starvation. He was an active party member from that day forth. Not from want, of course, but from need. ;)
And that, friends, is the story of one of our more ridiculous made up items. I wish I could take credit for it - cuz it was damned funny - but, alas, I cannot. It was a group effort to create this mythical artifact and I was merely a voice in the chorus. I've invented a few things (not items, but physical acts) myself since then, but most are not forum appropriate. :D
Decanter of Endless Rum. That was the only magic item we ever needed.
Cursed item wearing it results in a -10 to will save/defence
Also known as a work shirt.
The book of endless pages of nonsense - Can never be finished or understood.
Candle of Flame Resistance