In 1005 AD, the Masamune is stolen from Guardia Castle. In 1006 AD, Porre wipe the floor with the kingdom of Guardia. Coincidence? NOT LIKELY!

So, let's take it point by point:

The Masamune is not exactly evil. It amplifies the emotions of its owner. That's why Radius killed Garai with it; he was overcome with his jealousy of constantly being belittled by Garai. Dario was overcome because he always felt inferior to his father and unfit to carry on his legacy; this anger at himself was turned outwards, focusing onto Riddel.

When someone who's innately good becomes the owner of the Masamune, the Masamune amplifies their goodness. So, when Dario is defeated, and Serge takes possession of the fabled blade, it becomes a weapon of good.

Since Masa and Mune, the two components of the blade are innately neutral, they can be both evil and good; their affinity relies upon the owner of the blade. However, Doreen joins up with them to form the Mastermune; Doreen is far more 'advanced' than Masa and Mune, meaning she can control the weapons affinity, and thus keep it good for the rest of eternity.

The reason the Masamune gave off an aura of evil when Radius and Serge enter the gateway to the Sea of Eden was because it was in the timeline where Dario was still alive. Therefore, the Masamune still had an owner whose evil had been amplified. The Masamune was thus also 'evil' at the time.

When Dario is defeated, Masa and Mune say that they had no idea what they were doing, but they get the feeling that it had been bad. In other words, it wasn't them "being mischievous" or anything like that, they were overpowered by Dario's feelings of hatred.

As for Frog wielding it in CT, well... Yes, he was a whiny bitch, sulking in his hole. He was full of hatred and rage towards Magus and also himself. But the thing is, the Masamune he wields at first is not the true Masamune. It only becomes so when he complete's the Hero's Grave sidequest; visiting Cyrus' tombstone. I can't remember the actual dialogue between Masa and Mune, but the gist of it is that the power of the sword comes forth from the power of its wielder. At this point, Frog IS pure, whether by killing Magus at the North Cape, or letting him live; either way, he is pure, and therefore the Masamune becomes as I mentioned earlier.

And in lieu of arguments I've had on this subject on other fora, the PSX ending in New Game+ is setup for Chrono Cross. Therefore, all that happens in New Game+, has already happened in Chrono Cross. Therefore that timeline is correct.

I think that's it on this subject...