I thought the dwarves were just sitting underground in Sacred 2 and came out after the events of the game. Then in 2 millennia between the games they got exterminated. Otherwise the last dwarf is an immortal.
As for the TG PC, do remember that he was buried alive for who know how long. The starter temple got covered in dirt and vegetation to the point of trees growing on top of it. And in the human region the crazy test dragons in the labs were a thousand years old. My guess would be, the TG got buried at the start of the great war.
On the other hand, the newer TGs are well maintained and functional. Every store has all the parts: heads, arms, legs, feet, torsos, batteries. Have any of you considered building several TG just out of the parts alone?
The only problem would be their T-Energy batteries, as the endings of the game removes most of the T-Energy from the world.
So there are 2 reasonable theories where the TGs are in S1 and S3.
1 TGs moved again, somewhere more isolated.
2 TGs are in hibernation, locked away in huge vault. The Sheraphims don’t want to wake them up, believing TGs will contest them for world power, or at the least annoy everyone by going through everything like raccoons.
Hmm. Don't recall seeing anything in the game regarding the Dwarves coming out AFTER the events of Sacred 2...
However, I do recall in Underworld, there's some lore having to do with the Dwarves being sucked into the Underworld by Anducar. There is no actual reference to WHEN that happened.
As to the last dwarf, our hero from Sacred 1 Underworld, I think there may be other explanations as to why he, alone survived. If you recall the opening story, he crash lands in some sort of flying machine that looks sort of like a helicopter of some sort and is somewhat clueless as to where he is.
As such, I have a theory of what happened and how... Time Travel! The dwarf came from a point in time before Sacred 2... Back when Dwarves still existed... And somehow, through some miracle, he got transported through time and space, only to wind up at the start of Sacred 1.
TGs: For what it's worth, our hero TG does a bang up job of wiping out most of the TGs in Ancaria on his class quest. The rest are mopped up when you get to the last part of the wastelands and the great machine complex. Given the hero TG is, for all intents and purposes the last survivor, and his physical state, it's likely he's fallen apart or at least, broken down.