200 years ago the lovely bad-boy vampire was born. Back then he was named William the Bloody, but after Angelus made him a vampire*, he tortured his victims with railroad spikes, hence earning the nickname, Spike.
Since then he's fallen in love with another vampire made by Angel, Drusilla. Dru's just slightly off her rocker, but she loves Spike all the same. At least she did until Angelus came back.
It seems that over 100 years ago, our boy Angel regained his soul, and has been playing lap-dog for the Slayer. Well, Angel fell in love with said Slayer, and they had sex. Angel lost his soul and reeneter the fold. Now he's romancin' Dru, and Spike's not happy about it.
Did we mention that Spike's been in a wheelchair while this was goin' on? It seems that a certain Slayer knocked Spike unconscious and he fell into a organ while carrying Dru (I suggest you rewatch What's My Line pt. 2 for the full story). A fire started and Spike was severely injured.
But Spike got out of the wheelchair, but kept it hidden from Angel and Dru, until, after making a deal with the Slayer, he stands up and wacks th sh*t out of Angel. He kidnaps Dru and then leaves Sunnydale**.
Oh, Angel was sent to Hell, and the Slayer has also left town.
The Following was taken from the Official Site
Nicknamed as "Spike" because of his fondness for torturing his victims with railroad spikes, William the Bloody once hunted side-by-side with Angel. Since then, Angel has had a change of heart about killing humans. Spike on the other hand, will kill anyone who gets in his way. The Anointed One found that out the hard way when Spike became angry and hoisted him up into the sunlight, burning him to nothing.
* I say Angel, not Dru, made Spike because it has been stated on the show (in School Hard) that Spike is two hundred, and Dru was still human in 1860 (as in Becoming pt. 1) so she couldn't have made Spike a vampire.
** Both James Marsters and Juliet Landau have been signed on for at least five more episodes of Buffy.