The Arkenstone is a defunct Quest artifact diamond belonging to the Dwarf role, which existed in versions of SLASH'EM before NetHack 3.3.0 made race and role separate choices. When carried, it gave magic resistance and acted as a luckstone. When invoked, it granted object detection, as per the potion.
The Arkenstone comes from the Tolkien universe. It was one of the greatest treasures of the dwarves of Erebor (the Lonely Mountain), who called it the "Heart of the Mountain". Its function as a light source, or as a means of detecting treasure, is inspired by Bilbo's discovering it in the hoard of Smaug by its own luminosity. Its association with conflict was probably suggested by its role in the dispute that preceded the Battle of the Five Armies.
The Arkenstone patch for vanilla NetHack makes it a randomly generated lawful artifact that can occasionally (with a 1 in 75 chance) be found in the inventory of a dwarf king. This version of the Arkenstone is coveted by all monsters, so carrying it in open inventory causes conflict and aggravate monster. Even demons want it: if a demon prince sees that you have the Arkenstone in your open inventory, it will demand the gem as a bribe, instead of gold.
The Arkenstone is also present in dNetHack as the crowning gift for dwarf knights, a chaotic diamond. Here its conflict effect is toggled by invoking it (as with the Sceptre of Might). In addition, it functions as a light source when carried in open inventory.
Arkenstone, Heart of the Mountain, property of the King under the Mountain, is the most valued jewel that the dwarves possess. It shines white light that can guide your steps in the darkness, and carrying it is said to increase your carrying capacity. When invoked it will reveal the gold around you.
It was the Arkenstone, the Heart of the Mountain. So Bilbo guessed from Thorin's description; but indeed there could not be two such gems, even in so marvellous a hoard, even in all the world. Ever as he climbed, the same white gleam had shone before him and drawn his feet towards it. Slowly it grew to a little globe of pallid light. Now as he came near, it was tinged with a flickering sparkle of many colours at the surface, reflected and splintered from the wavering light of his torch. At last he looked down upon it, and he caught his breath. The great jewel shone before his feet of its own inner light, and yet, cut and fashioned by the dwarves, who had dug it from the heart of the mountain long ago, it took all light that fell upon it and changed it into ten thousand sparks of white radiance shot with glints of the rainbow.
[ The Hobbit, by J.R.R. Tolkien ]