Here is my config:
ALL ITEMS MAX: -1
DIAMOND_SWORD: 16
But when I try to pick up more then 1 diamond sword it just stacks it once. So like the default minecraft stacking.

I can't replicate this with that little bit of information.

What version of StackableItems are you running?
What version of CraftBukkit?
Are you in survival or creative mode?

Are you putting "DIAMOND_SWORD: 16" in defaultItems.yml or another file?

Don't forget:
Every use of items (like sword) changes the item id.
You can see it with TooManyItems.

First use of Diamontsword: ID 276:1
Second use: ID 276:2
Third use: ID 276:3
and so on...

The Item ID does not change for weapons. That is the durability. If the issue is that two swords of different durability are being used, then they will not stack and that is normal behavior.

Closing as I cannot reproduce and there has been no feedback from the op.