I disagree. A vampire baby came out of her [censored] IMO.
Yeah, but the book about this tale doesn't say she gave birth to anything. Molag Bal violated her, and she ended up dying, and then undead. http://www.imperial-library.info/obbooks/lairvileopusculuslamae.shtml. As far as "begat" is used in the last paragraph, it's probably more of a metaphor - she was the first vampire, and thus those she infected are, in a way, her "children." But, not through pregnancy and all that stuff.
EDIT: It appears that Daedric Princes can create curses with their blood:
Shedding a lone droplet of blood on her brow, Bal left Nirn, having sown his wrath.
. So, it's like a Daedric Arifact, in a way...