I tried using the dagger on the Kuntilanak and I can't seem to hit her while she's on the move. According to the book it's her weakness though.
This isn't a bug, in order to use the cursed dagger you must wait until a ghost hunt begins. If you are in the ghost room you should see the ghost pop up and be idle for about 5 seconds before moving to find you. While the ghost is idle you use the dagger as it doesn't work when the ghost is on the move.