Bakura was supposed to die. But if Bakura died and the pharaoh succeeded Zorc would be forced to face the god spirits and wouldn't have his chance to destroy the world. So Bakura was instead sealed into the Millennium Ring, keeping Zorc anchored to the world to give him another chance.
As pure Dark Bakura should have been destroyed by the shadows. No one with that large a gap in themselves could survive in the Shadow Realm alone. Zorc protected him from it, the demon strong enough to keep them from ripping Bakura's mind apart. The Ring was still hell for the thief king. For the first time since his people had been slaughtered he was separated from their spirits. It cleared his mind, but it also introduced a vast mind numbing loneliness to his life. Diabound couldn't reach him, Zorc could only whisper, and there was nothing to do.
Bakura mainly ignored Zorc. The demon was useless. He couldn't get his revenge trapped as he was. Shadi kept a close eye on the Ring as well. Bakura spent years developing his magic instead. Slowly he mastered the shadows until he could manipulate it better than even some who were born there. His work made him stronger. Now he could sense the world beyond the Ring he was trapped in. And he could find a host to bear him.
It wasn't easy. First he had to find someone who could hold him without instantly dying or going insane. Then he had to avoid Shadi, who would constantly insist on bringing him back. And none of his hosts lasted long. No matter how carefully he chose them eventually they would die or go insane, the longest lasting only nine months. There was plenty he could do in that time, but the world was changing as time moved on, forgetting magic had ever been real. Decades could pass between having a host, and it left him frustrated. He would never be able to take the other Items from Shadi and complete his revenge. He didn't know his trouble was because he was pure Dark, and only a pure Light could hold such an unbalanced soul.
Then something changed. It had been almost 5 millenniums since he had been sealed away, and the seal the pharaoh had placed on the Shadow Realm was finally coming undone. Sensing the shadows beginning to stir again Bakura prepared himself. This time he would find a host that could hold him. With some people regaining the ability to use small magics his hosts could last longer, drawing on the Shadow Realm to bear Bakura's spirit.
A rich millionaire named Pegasus had recently lost his wife. He traveled to Egypt searching for solace. Shadi found him there. He would be a holder of one of the Millennium Items. He warned the man that he could offer him power, but saw tragedy if he did so. Pegasus followed anyway and took the Millennium Eye. It gave him sight of the Shadow Realm, the spirits inside it, and even further a glimpse of his wife. Believing that he could harness the power of the Millennium Items he asked Shadi for more, but was told that each item would be given to it's own holder in time, and then the game would begin to find the master of the items.
Pegasus researched what he saw in the Shadow Realm, and learned of the shadow spirits once used in the Shadow Games. Using his Eye he recreated the shadow games in cards. When the time came he'd use the cards to summon the shadow spirits to take the Millennium Items.
Bakura found the cards. He was amused to learn that people nowadays thought the shadow spirits were little more than a children's card game. Still, it would be useful. He found Diabound's card, and a couple spells he'd favored in the games. He slipped past Shadi again, finding a merchant to hold him.
The merchant quickly learned of the Ring's 'curse', growing sick, losing time, doing strange things without choosing to do so. He wanted to get rid of it and quick. Knowing the host would die soon Bakura searched for another and found an archaeologist from England. He would work. The Ring was given to him, and Bakura left Egypt.
To his shock the Ring was given as a gift to the archaeologist's son, Ryou Bakura. He must have been a descendant of some sort. Ryou was only six, far too young to serve the spirit's needs. He decided to possess him, believing doing so would instantly kill the child and free him to find another host. But he couldn't. Ryou was too young, unable to contain even a small part of such a powerful spirit's soul. A weaker spirit might possess him, but Bakura couldn't. All he could do was wait until Ryou grew old enough.
Ryou was unlucky. He had been born a pure Light. Just as unbalanced as a pure Dark the world had tried to destroy him. With the Shadow Realm sealed they couldn't get to him, but bad luck followed. The gift of the Ring on his sixth birthday was given in hopes that Horus' Eye, a protective symbol, might help somehow. Ryou loved the cards that came with it. Diabound was to him beautiful. Ryou was an avid game player and he loved collecting the duel cards, though he didn't know how to play.
Bakura grew more interested in Ryou with nothing better to do than watch him, surprised that Ryou had managed to keep Bakura for over a year. His seventh birthday passed in celebration, Bakura stirred with memories of his own family and hating Ryou for it. It was only a couple months later that Ryou's mother and sister died in a car accident. Bakura was enraged. Just like him Ryou's family was stolen, and again Bakura was helpless, unable to act inside the Ring.
Grief drew Ryou's father to spend more and more time away, more interested in his work and escaping the reminder of the family he'd lost than the son he left behind. Ryou had to learn how to care for himself. It was when Ryou fell sick that Bakura discovered he could in fact communicate to Ryou. When Ryou was weak and on the edge of consciousness he could even puppet the boy in a way. In this he could keep the boy alive. It also opened new possibilities to Bakura. Ryou had beat the record of holding the Ring. Perhaps he could continue to do so, and since Ryou could hear his voice Bakura had the chance to shape the boy to be the perfect host.
Bakura used Ryou's dreams to manipulate the young boy. Ryou grew interested in the occult, wondering where The Voice had come from. He didn't particularly care for it, as The Voice often insulted him and put him down, but it was the only company he constantly had. So he listened and built a deck around Diabound as he was told to. He took up martial arts for The Voice. When he was nine Ryou discovered a game called Monster World, an RPG game where he could build models and characters to tell a story and have the heroes battle against the Game Master.
It was hard, as Ryou had always been withdrawn, but he managed to make friends through this game. Bakura was furious that Ryou would pay attention to people beyond him, knowing that if Ryou wasn't completely reliant on him his plan would fail. So he hatched a plan. Ryou and his friends played, and Ryou made a careless wish that he could play this with his friends forever. Bakura used the wish to possess Ryou. It was draining for both of them, but when Ryou took the body back the souls of his friends were sealed in the characters they'd used in the game.
Ryou was scared, but The Voice seemed to enjoy Ryou's hobby, and even encouraged building new models for Monster World. Yet every time his friends play their bodies would slip into comas, souls trapped in their game pawns.
Hopeful for a new start Ryou's father moved them to Japan during a long term dig. Ryou was now in a country where he didn't know the language, isolating him even more. He clung to The Voice, even though he suspected it had something to do with his friends going missing. Bakura was learning how to use Ryou even better now though. He could possess Ryou for longer, and began to use Ryou's body to steal. With Ryou at the center of his world for so long and the spirits no longer crying for revenge constantly Bakura forgot his purpose, simply using his powers to enjoy life and remove any threats to his host. Anyone who tried to hurt Ryou simply joined Ryou's collection of game pawns. Extremely fond of his host and how Ryou hasn't suffered the usual 'curse' his former hosts had Bakura enjoyed life as his host's protector.
Ryou was twelve when his father officially abandoned him and stopped coming home. Occasional payments were made to keep Ryou alive, but Bakura supplied most of the money they needed to live comfortably. Ryou was unaware that the money deposits were often not from his father as he thought but from the money Bakura made as a thief. Bakura didn't tell him. He was not yet ready to tell his host about himself, and he enjoyed watching Ryou blossom into someone so resilient under his father's neglect.
Able to possess Ryou for longer periods of time now he began to teach himself about the modern world. Bakura didn't want to lose his title of King of Thieves simply because the world had changed. He'd catch up. In the meantime he continued to give Ryou 'gifts' of his friends' souls. It caused trouble, Ryou often having to change schools, but Bakura didn't care. Ryou was his.