Great shout. Ya gotta love arch-villains whose motivations are, when viewed in a certain light, perfectly understandable. For that reason, I gotta pick Dagoth Ur:The Madman said:Irenicus from Baldur's Gate 2. Not only did he turn out to be a fairly sympathetic character once you begin to realize his motivations later in the game, but he genuinely gets shit done. Seriously, this isn't some pushover villain that stands in the background and monologues only to turn into a complete wimp once it's time to throw down, no, he's not only fully capable of kicking ass but does so multiple times throughout the game making him feel like a genuine threat.
The whole Tribunal vs Ashlander account adds an interesting twist into the main quest; do you accept the Tribunal account that Dagoth Ur went mad with power and tried to steal the Heart, or do you accept the Ashlander accounts that Ur was loyal to the Nerevarine and was betrayed by a power-hungry Tribunal?