
Someone gave me the lowdown. Scroll down if you want to know
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AoAo is the reincarnation of Ao Yue, who was Ao Gu's little brother. Ao Yue's body was used to trap some evil entity, after which I think it somehow got contained inside Ao Yue's dragon pearl. Then he was considered dangerous so he was sent away, his memories were erased and his name was changed to Xuan Yue, and though Au Gu went to visit him and befriended his own little brother, Ao Gu wasn't allowed to tell him the truth so Ao Yue didn't know Ao Gu was his real brother. Later Xuan Yue also he met the human Daoist cultivator, Xiao Jifeng, Xiao Jifeng somehow got Xuan Ye's pearl and became corrupted by the evil entity within it, which is why Xuan Ye was left powerless against him and also why Xiao Jifeng became "bad" and obsessed and ended up torturing and imprisoning him. Xuan Yue and Xiao Jifeng died, but Xuan Yue was somehow turned back into a baby, AoAo, where Ao Gu took him back home to be raised as a prince, but everyone else knew about the "dark entity" thing of his past, so they kept rejecting him. Meanwhile, Xiao Jifeng was obviously reincarnated as a western dragon, Ryan, and him still having Xuan Ye's old corupted pearl is the reason by he's a dragon-part-demon right now.

This really clarifies everything. I was lost, but not anymore haha. One detail that I think it might be different: I'm not sure if people know that Ao Ao is Ao Yue, because I remember someone saying that Ao Yue was condemn for something and his soul was crushed to never reincarnate. So I think Ao Gu managed to save him and nows he pretends that Ao Ao is a new little brother. And people reject Ao Ao because he born with weak power, I remember this being commented more than once. Now we know his lack of power is due his lack of pearl, but I think the general people don't know that. I wish someone could say if this is right or not.

We still don't know what is the evil thing that went inside Ao Yue's body. The thing about it being Ryan's past self, Xiao Jifeng's past self, is just a theory that considers it possible that what went inside Ao Yue was just *a part* of the evil thing and not the whole (like for example, just its powers, while the rest of the evil entity was able to escape) and thus the part of the evil thing that escaped was reincarnated into Xiao Jifeng (Ryan's past self). You need to understand that in Asian culture it is possible to SPLIT souls, as each individual soul is made up of smaller souls, and each of these smaller souls (which become "sub-souls" once they join together to form a bigger soul) could either be the memories of the overall soul's previous life, or a part of the soul that is supposed to contain one of the souls' functions, like for example, the ability to feel a particular emotion or develop a particular trait (that's why sometimes the overall soul is made up of smaller souls called "the anger (sub)soul", "the wisdom (sub)soul", the love (sub)soul", etc.

The room that Ryan has been confined in as of the latest chapter doesn't have anything to do with the one he and the protagonist were together in before, which was a room that Ryan's past self, Xiao Jifeng, used to confine AoAo's past self, Ao/Xuan Yue, in their past lives. Xiao Jifeng, who had taken Ao Yue/XuanYue's (AoAo's past self's) dragon pearl and had become corrupted by the evil entity inside, grew so obsessed that he imprisoned AoYue (AoAo's past self), forcing AoAo's past self into a corner, which made AoAo's past self desperate enough to commit suicide by making his own soul self-implode (which is different than when an individual harmlessly and temporarily splits their own soul into smaller self-sustaining parts, that can become new individuals).

Ryan's past self, Xiao Jifeng, is obsessed with AoAo's past self, Ao Yue (also called Xuan Yue) and not with AoAo: he wants to turn AoAo BACK into Xuan Yue! ...And "the evil black dragon" is different from Ryan's current self as a western black dragon. The "evil black dragon" was an allegedly evil, black-colored Asian (EASTERN) dragon who became infamous because he scared Chinese people, and that dragon died a looong time ago... whereas Ryan is a living, breathing Western dragon (NOT an Asian dragon) that no one yet knows anything about in China, and who also happens to be black in color. The "evil black dragon" who scared people in the past was actually Xuan Yue (AoAo's past self) and "evil black dragon" is just how other Chinese people unfairly called Ao Yue after he was expelled from the palace and changed his name to "Xuan Yue". That's because those people thought he was evil, but it was clearly a misunderstanding, and we still don't know why, but some readers say it's probably either because they knew Xuan Yue had an evil entity trapped inside his dragon pearl, or because of some evil deeds Xiao Jifeng (Ryan's past self) may have committed against humans after he became possessed/influenced by the evil entity inside Xuan Yue's dragon pearl, or because of both.

Anyway, if you're still confused about anything you can try reading Bloomie's summary of the entire backstory, here in this thread (this where I myself got it):
http://www.mangago.zone/home/mangatopic/9295229/

So far we only know his bro, his dad and the doctor know that he (Ao Yue) has reincarnated. As for Ryan, though, no one except AoAo and Ryan's school headmaster/swimming teacher knows that Ryan is Xiao Jifeng's reincarnation, and the headmaster only knows because he's actually Xiao Jifeng's old friend, who keot living on as he's another human Daoist cultivator who attained immportality through Ki cultivation (check the memories and dialogues of the white haired guy with the short ponytail in chapters 43 and 45).

Nope, because Ryan has like a multiple personality disorder where he has two different personalities, and the only personality that remembers the whole thing in the past with Ao/Xuan Yue is only the personality of Xiao Jifeng (of Ryan's past self), which is still existing within Ryan, as a alternate personality, in a deep, unconscious part of Ryan's soul, and that is an alternate personality that only manages to "come out" and "become conscious" from time to time, whereas the one that the "Ryan" personality met and fell inlove with, even back when he was a kid, was always Aoao... The "Ryan" personality doesn't even know who Ao Yue/Xuan Yue is, and doesn't even seem to know that a guy with that name ever existed!
actually i dont really understand the storyline but at the same time i think i understand it