In fact the reason why "retard" is offensive, is because it is taking a term for a mental condition ("retardation") and turning it into a slur. It's similar to

In fact the reason why "retard" is offensive, is because it is taking a term for a mental condition ("retardation") and turning it into a slur. It's similar to how calling something "gay" in a derogatory manner is offensive. With "retard", the derogatory use became so much more prevalent than the clinical that even the latter was overshadowed and began to take on a negative connotation (at least, for many people).