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During the battle with the Prime Evil, the soulstone they intended to imprison the Lord of Destruction in was destroyed due to Baal's destructive nature. Unable to function on its own and without any means to find a replacement stone, the Horadrim didn't know what to do. Tal Rasha, one of the foremost of the Horadrim, theorized that the body of a human could serve to complete the prison. To save the mission, and likely in his own eyes the world, he volunteered to contain the demon within himself. The Horadrim then sealed him in a chamber in one of seven tombs far out in the desert of Aranoch, hoping no one would ever find him.
In his arrogance, Tal Rasha had severely underestimated the power of a Prime Evil. The prison did work after a fashion as it prevented Baal from escaping from his tomb, but Tal Rasha's mind was no match for Baal's, and over the years the demon gradually took control of him. By the time Diablo, he himself possessing a mortal in the form of the wanderer found the tomb during the events of Diablo II, nothing remained of Tal Rasha himself.
Even worse, once Baal was free he had access to the knowledge and power that Tal Rasha had possessed in life, chief among them the location of the Worldstone.
Tal Rasha doesn't appear in Diablo II, but the chamber where he was imprisoned can be found. It is located in the true Tal Rasha's Tomb in the Canyon of the Magi in Act II. There the player encounters Duriel who was summoned by Baal and Diablo both to trap Tyrael and to stop any pursuers following their trail.
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