Shadraxil was already a great wyrm when the nation of Cormyr was founded in 26 DR and had sired many other Shadow dragons, including Shhuusshuru. He laired in the Thunder Peaks where his granddaughter Aurgloroasa presently resides.
When Cormyr absorbed the nations of Esparin and Orva at its founding, it built several fortresses in the Thunder Peaks to guard its eastern border. In 236 DR Shadraxil began attacking these keeps. In response Cormyr sent the knight and dragonslayer Jerold Keegan and a contingent of men to slay him. Keegan's plan involved luring Shadraxil into an arcane trap that would seal him inside a magical prison in the Plane of Shadow. The plan succeeded, but in his rage, Shadraxil drew upon all of his considerable arcane powers to extend his influence beyond his prison and managed to drive Keegan mad. Seeing the dragon's work for what it was, the knights were told by King Tharyann to slay a juvenile shadow dragon, bury it and keep the affair secret. The fortresses were abandoned for fear of future reprisals from Shadraxil.
Over a thousand years later, Shadraxil had given up hope of escape but then Shar folded the Plane of Shadow into the Shadowfell and, at the same time, the Spellplague weakened his magical prison. Shadraxil petitioned Shar to help him escape in return for his service and she agreed. She sent her agents to infiltrate the town of Winterhaven and after several years of excavations and preparation the cult of Shar was ready to free him but adventurers happened to stumble across the secret and closed the portal to Shadraxil's prison before he could manifest.