We know very little about Habacalva. From what little insight we can glean from the occasional mention of her in the Diablo II guide, she appears to have been a very influential Fire Sorceress of the Zann Esu some time ago before Diablo II took place. From information from various Fire Spells skills provided by Blizzard Entertainment, it appears she bore a magical, enchanted blade of fire, assaulting the elemental planes with it. Apparently, the name of the weapon was associated with her after some time, under fear from her enemies of the mystical object's great power*. She is also the Sorceress credited for freeing the Hydras, magical serpentine avatars of fire. It is not alluded to how they were imprisoned or who did so to them. Regardless, the creatures are now life-long allies of the Zann Esu.
* The Enchanted Blade: This is based strictly on personal opinion. In Diablo II, there is a Unique item named Hexfire, a blade which gives significant bonuses to all Fire Spells skills and has additional charges of Enchant. With both of these items in mind, and the fact that it's a strictly fire-based sword, it would be logical to assume that this might be the blade of legend in relation to Habacalva.
This skill gives an experienced Sorceress the ability to imbue a weapon with the power of fire. The renowned Sorceress Habacalva once assaulted the elemental planes, themselves, wielding such an enchanted mace. Her enemies soon came to fear the mention of the weapon as much as her name.
This skill enables the Sorceress to summon a beast of pure flame from the core of our world. The Hydra, allies of the Zann Esu women for generations, owe their freedom to the actions in ancient times of the renowned Sorceress, Habacalva. They never fail to answer a call from a proven Sorceress, and stand ready to spit bolts of scorching magma at her enemies.
Additional Source(s): In-game observation, the Diablo II manual, and the Arreat Summit website.