Most races in Shadow World are of humanoid stock - from Space Master (1st/2nd editions) it's almost certain that some race transplanted Humanity on several worlds within a distance of Earth. They also genetically modified the Altha and probably imported races for different purposes: giving rise to Elves, Lugrôki, etc. Due to the presence of half-races I would tend to think they all come from the same genetic stock which allows interbreeding. Other non-human races are imports.
They can be the result of genetic engineering as well - you don't need many alterations to make races genetically incompatible. And we know that the K'Taa'Viiri were master geneticists and experimented with bizarre combinations, using local stock as well as stock from other dimensions. It wouldn't be far-fetched to have centaurs, for instance, being the result of K'Taa'Viiri gene-splicing.
It's a fairly classic story of would-be gods making slaves in their own image (more or less). The only question is which races are a direct result of K'Taa'Viir gene-splicing, and which are by-products. We know that elves have been created by the K'Taa'Viiri for specific purposes. The big question is whether human races have been created for a specific purpose as well, or they are by-products.
It is also interesting to note that some of the extrasolar visitors (namely, the Taranians, the ancestors of the Aldari of Emer) are completely human-looking and genetically compatible with them, suggesting a common origin as well.
And when you see what Ulya Shek and Jenkyna are doing, there's no real limit of what is actually possible with K'Taa'Viiri technomancy.
But while you can have any bizarre specimen as the result of an experiment, having a whole race requires more - it requires a purpose. No one makes tens of thousands of people and make them capable to breed truly just because - it is a waste of resources that could be used to create a race that fits a purpose. Which means that all created races that became widespread must have had a purposqe, even if that purpose is lost not. And races that do not have a purpose either exist on a very small scale or are by-products or transplanted races.
And that kind of world plot (as a race, you were created by the Lords of Essaence to be useful slaves. But why were you created ?) can be the focus of a very long campaign with major repercussions.
It also justifies the basic Shadow World premise: races were not created equal, and some races are intrinsically "better" than others, especially better in a particular field. Just like the transhuman types in the SM Imperium, some (especially the Kashmere variants) are better than others, and much better than the baseline human. And I wouldn't balance that - if Laan are better than Shay, there is no reason to try and rebalance them in game terms - Laan are better than Shay because they were created to be better at many purposes. Genetic Engineering and Eugenism have ugly consequences and side effects, but they *do* exist in Shadow World and I find it much more interesting to deal with the consequences and make them a campaign feature than try to erase them and transform Shadow World into a generic, 'everyone is equal', kind of world.
You just have to run a campaign with only Shay characters sometimes, just to give your players a taste of what it means to be of a 'lesser' race
