The wraith is the restless spirit of the evil necromancer Nigel Blackheart. He appears as a shadowy outline of his former self, with burning red eyes. Because of his close ties with the Negative Elemental Plane, he retained some of his spellcasting power when he died, although much of his power was lost when he became a wraith.
You found him calling all local undead to a macabre party in a mental asylum… He had risen from the dead and taken over the hospital. When you closed the rift that was feeding him negative energy, he fled to the mountains.
The very same mountains you had to travel through to get back to Tondara, actually… You managed to defeat him and smash the mirror that was keeping him alive, even though he had given undead life to the skeleton of a black dragon to guard himself.