When you get Mordenkainen's Disjunctioned, the base durability of all your items is reduced. You can test this in PVP: get disjunctioned and look at your items (something that was 70/70 pre-disjunction will say 10/10 after).
In most cases these items will return to normal. However, if an unbound item already has ~30% or more permanent damage from a moderate to low base durability (say 40 or under remaining), when disjunctioned it will become flagged as broken beyond repair. Once disjunction wears off the item will appear as normal, but will NOT EVER be repairable at any vendor any longer.
My chaosguards were 36/37 when disjunction hit me in the abbot (on normal). They became red/broken beyond repair while under the effects of disjunction. After disjunction wore off, they appeared normal but can no longer be repaired at a NPC. As I already experienced with a bloodstone (see here http://forums.ddo.com/showthread.php?t=200886), if I continue to wear this item it will hit 1/37 durability but then become full red 0/0 broken beyond repair when that last point goes.
This spell can be used in PVP to destroy your opponents gear. Be aware.