$ds^2$ is really a shorthand for $d\vec s\cdot d\vec s$, which is shorthand for $g_{ab}ds^a ds^b$.
Thus, the real quantity to consider is not a scalar, but the displacement-vector $d\vec s$.
And vectors aren't "signed" (like scalars are) and can't be ordered (like scalars can).
Is the vector $(3\hat x - 4\hat y)$ positive or negative or zero? It's neither.
Is the vector $(3\hat x - 4\hat y)$ greater, less than, or equal to $(4\hat x - 3\hat y)$ ? It's neither.
(When one uses $-\vec v$, it means the vector you add to $\vec v$ to get $\vec 0$.)
What can be signed?
- The magnitude $\|d\vec s\|=\sqrt{d\vec s\cdot d\vec s}$ is a nonnegative scalar, which is signed (here, zero or positive). [In some treatments in relativity, it could be pure-imaginary.]
- A component along a direction (e.g. $ds_x=d\vec s\cdot \hat x$) is a scalar, which is signed.
So, what I am saying is that "$ds=\pm \sqrt{(ds)^2}$" doesn't really make sense (or is ambiguous)... unless you are asking about one of the above and maybe should have better notation.
The issue is really about geometry in general, not specific to relativity.
Suppose we are dealing with Euclidean space.
Given only "$ds^2=1$" (that is $d\vec s\cdot d\vec s=1$), then $d\vec s$ is a unit vector.
If you also know that $d\vec s$ has only an $x$-component, then either $d\vec s= \hat x$ or $d\vec s = -\hat x$.
If further $ds_x\equiv d\vec s\cdot \hat x \ >0$, then $d\vec s= \hat x$, otherwise since then $ds_x<0$, then $d\vec s= -\hat x$.
For your specific relativity problem,
the real question is therefore
Given $d\vec s\cdot d\vec s=c^2 d\tau^2$,
is the spacetime-displacement vector $d\vec s=c d\tau \ \hat \tau$ or $d\vec s=-c d\tau \ \hat \tau$?
As a purely mathematical problem, you need more information. Both are acceptable "solutions".
Invoking the physical input that massive particles have future-timelike 4-velocities (which point into the future-lightcone) [that is $ds_{\tau}>0$ with the usual conventions], then you can conclude $d\vec s=c d\tau \ \hat \tau$.