Sylvanas and her rangers fought to their last, but the army of undead was simply too much for them. Has anyone else noticed that armies of undead always overwhelm through brute force? They never show any strategy. Anyway, Arthas's army broke through the gates and he caught up to Sylvanas as she went to warn Silvermoon City. The two heroes fought one on one, and Arthas killed Sylvanas. But that wasn't enough for the sadistic nutjob. Saying he would not give her the peace of death, Arthas brought Sylvanas's spirit back in the form of a banshee.
Arthas's magic had put Sylvanas completely in thrall to the Lich King, Ner'Zhul. She helped Arthas destroy Quel'Thalas and guarded Lordaeron with Kel'Thuzad and a trio of Burning Legion Dreadlords. But when the Legion commander Archimonde was defeated by Malfurion and a whole ton of other people, Arthas returned to Lordaeron and told the Dreadlords that the Legion sucked and they better get the hell out of his sight because they weren't friends anymore. (Actually, Arthas and the Lich King had been "fired" by Kil'Jaeden, but he probably didn't want to admit this to the dreadlords.) Arthas, Kel'Thuzad, and Sylvanas then killed every living soul in Lordaeron and set up shop as the leaders of the Scourge.
But Arthas's corruption of Sylvanas would come back to bite him. By raising her from the dead personally, Arthas had given Sylvanas powers beyond all the other undead, and she began to break free of the Lich King's control. She wisely chose to keep this quiet from Arthas and Kel'Thuzad, but was discovered by the Dreadlords (Varimathras, Balnazzar and Detheroc) who had been forced out earlier. They told her that Arthas and Ner'Zhul were both becoming weak, and that they were going to use this opportunity to overthrow the Scourge and retake Lordaeron. Sylvanas still bore a deep grudge against Arthas for, y'know, killing her, so she agreed to help them on her own terms.
The Dreadlords ambushed Arthas in Lordaeron, but he managed to escape into the woods with the help of some banshees, only to run into Sylvanas. Her loyal banshees had led Arthas directly into her trap. Sylvanas shot him with a poisoned arrow and made a horrible, horrible decision: "A quick death, like the one you gave me? No. You're going to suffer as I did. Thanks to my arrow, you can't even run. Give my regards to hell, you son of a bitch." Before she could successfully torture and kill him, Kel'Thuzad chased her off and the duo escaped to Northrend. Way to totally not prevent a giant threat to the world there, Sylvanas. Maybe it's time to stop conferring with Dr. Evil on strategy.
Sylvanas and her fellow undead were now free of the Lich King's control and Arthas's vengeance, but they didn't know what to do with their unlives. Wander around possessing people? Scare kids at parties? Before Sylvanas could think more about her end-of-life crisis, Varimathras appeared and invited her to join the Dreadlords in ruling the Plaguelands. Sylvanas declined and decided to get a leg up on the Dreadlords by creating an army of her own. She sent out her banshees to possess the leaders of the various humanoids in the area and came back leading a giant force of ogres, trolls, murlocs, and pretty much everything else you had to kill for low-level quests. Varimathras knew when he was beaten, and begged Sylvanas to join her side.
Sylvanas decided to take out Balnazzar and Detheroc, the other two Dreadlords in the area. She sent banshees to possess the human forces of Detheroc's puppet, Garithos. She and her army then snuck into the Dreadlord's bases while Garithos's guards were out of commission and killed Detheroc. With Detheroc dead, Garithos was free of demonic control, although he was still kind of a jackass. He agreed to help Sylvanas and Varimathras kill Balnazzar, as long as he was left to rule Lordaeron afterwards.
Sylvanas, Varimathras and Garithos launched an attack together on the capital of Lordaeron (which doesn't really have a name, but is situated where the Undercity is now.) They slashed through the Burning Legion's forces until they confronted Balnazzar. As a test of loyalty, Sylvanas demanded that Varimathras kill his brother. Varimathras was horrified, but eventually he acquiesced and killed Balnazzar. (Although Balnazzar somehow survived and led the Scarlet Crusade -- you probably killed him in Stratholme sometime.) This business being done, Garithos ordered Sylvanas and Varimathras out of his new lands. In what must have come as a shock to no one but Garithos, Varimathras happily slaughtered the human, and Sylvanas proclaimed herself as the leader of the Forsaken (her undead army's new name) and ruler of the Plaguelands.
Where she is now: Sylvanas rules from her throne in the Undercity, with Varimathras at her side. Occasionally she gives quests or yells at people. She still possesses a deep hatred for Arthas, and is probably none too happy with the Burning Legion. No one really knows why the Forsaken allied with the Horde, and many consider it an alliance of convenience. Still, the Forsaken and Sylvanas are pleased that her old friends, the Blood Elves, have joined the Horde. Perhaps she even goes back to Silvermoon City from time to time.
Distinguishing characteristics: Despite being an undead high elf banshee, Sylvanas is portrayed in WoW as a differently colored night elf model. This can probably be chalked up to Blizzard's unwillingness to design a unique model just for her. However, there's still a question of how she got from being a non-corporeal banshee spirit to her current form. Some people suggest that she possessed the body of a night elf, but another likely theory (from the Warcraft RPG) is that Arthas had her body exhumed as a reward for her service, and she was able to retake possession of it then.
For more information: WoWWiki on Sylvanas, Worldofwarcraft.com on the Lordaeron civil war, a very nice fan movie of the "birth" of the Forsaken.
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