Dragon's Lair was originally meant to have an evil wizard as the villain.
- The games attract mode mentions the castle that Dirk storms in the first game is owned by an evil wizard.
Mordroc's brother wasn't always a Time Machine.
- Originally he was human, but Mordroc cast a spell on him that either turned him into it or trapped his soul or personality in it.
Daphne is the real villain.
She’s intentionally trying to fuck with Dirk by pretending to get kidnapped 2 separate times so that she can take amusement in his certain death. Dirk is being carefully railroaded to not realize the whole thing is set up, which is why the games consists exclusively of FMV’s. This is also the reason Daphne was so relaxed in the chamber at the end of the first game. she knows none of this has any importance, and thus has no reason to care. Dragon's Lair is set in the same universe as Alice's Adventures in Wonderland.
Can you think of a better explanation for how Dirk somehow ended up in Wonderland using nothing more than a Time Machine?