From the earliest Divinity 2 screenshots the game seemed to have taken place in Ferol, so I think there were other races around at that point. Not sure why the setting was moved to the area west of the mountains.
If I understood everything correctly, there was not a real "shift towards the mountains", but instead parts of the land masses have been shifted.
Just look at Aleroth. Totally different from what we knew from Divinity 1 ...
And I think I remember some - was it a book ? talk ? - where it was stated that Elves seem to have died out - at least there.
Don't remember anthing regarding the other races of the High Council.
