If you try to improve an enchanted item you also erase any enchantment it has on it. Sad for poor quality enchanted items you sometimes find.

It is true.  I think the game creates a new item when you 'improve' one, and this is also why if an item was equipped before it isn't afterward.

Maybe this balances out that curses are eliminated when an item is disassembled.  The curse does not live on in the wood or metal. :P