Verified answer

First of all, you need to be at least level 90 in your alteration skill to start the quest for this dagger, so it's a bit of a problem if you're not a mage that's particularly skilled in that area.

Once/if you are level 90 in alteration, speak to Tolfdir in the College of Winterhold, and ask him what he can teach you about alteration, and that will start the quest "Alteration Ritual Spell". All you need to do then is equip the dagger in your right hand, and only the right hand for this particular quest will work; find a dragon corpse that you have previously defeated, or kill another dragon, as long as there's a corpse for you, and you have the dagger in your right hand, you will be able to obtain something called Dragon Heartscales from its skeleton, which is what you need to obtain to complete the quest.

I believe you will be able to store or drop the dagger after this, but I have no personal experience with this quest as I am not a mage-type player.

Kahvozeins Fang

Above answer is right but I want to add that you can drop the dagger from your inventory if you place it on a weapon rack in your home.

I totally forgot about the dragon scale armor lol- i was so mad looking at that damn dagger but now i know; and thanks Drexel, havent tried it yet but i think you saved me from this burden.