You've killed us both

[Lodestone]

Hypothesis: There never was a Shadow. That was a lie that Alexander used in order to trick Daniel into bringing him the Orb, and to manipulate Daniel into doing his bidding.

OK, then, if Alexander just wanted the Orb, why didn't he just kill Daniel and take it while Daniel was in England?

The orb grants power to whoever wields it. Daniel posessed the orb while in England, so Alexander couldn't overpower Daniel. Daniel's contacts, however, had no Orb, so Alexander could kill them. Alexander kills Daniel's friends to make him feel isolated and vulnerable, then offers him protection at Brennenburg Castle.

Why didn't Alexander kill Daniel after he got the Orb?

Alexander didn't kill Daniel because he realized Daniel was useful to him---he needed an assistant. Daniel helped him to do kidnappings and torture rituals to produce the vitae that extended Alexander's life, which Alexander claimed was "warding rituals" for the Shadow. Alexander was too busy trying to open the portal to do the rituals himself.

What was the red goo in Brennenburg?

While in Brennenburg, Alexander has the Orb. He also knows how to use the Orb. The red goo is a conjuration used by Alexander to scare Daniel into doing anything that Alexander wants him to do. Later it's used to stop Daniel from getting to the Inner Sanctum. Notice how the red goo first appears when Alexander and Daniel perform the first ritual with the Orb, not before. Also, the goo consistently tries to stop Daniel from proceeding after Daniel drinks the Amnesia drink.

Why does the red goo kill both Daniel and Alexander in one of the endings?

The red goo is conjured by Alexander with the power of the Orb. When Alexander loses the Orb, he becomes less powerful and loses control of the red goo. The goo then kills them both.

Why does the red goo disappear when Daniel stops Alexander in another ending?

The goo disappears because the Orb has been destroyed by Daniel. When the Orb is destroyed, the goo goes with it (and so does Alexander).