The Start of a new Sandbox: The City of Yrem

I'm starting a new sandbox game, using a draft form of the Tactical Situation Rules. The setting I'm making up as we go along. Rather than a megadungeon, the tent-pole is a ruined city, cribbed from many sources:

The city of Yrem sits on the border of the Great Northern Empire's Stillmarsh province, upon a rocky ridge amongst the swampy forest that dominates the region. Generic fantasy history, blah blah blah.

Long a favorite of scholars for it's isolation and quiet, it gradually grew as a hub for experimentation and research by the Imperial Guild of Magicians. Unbeknownst to most of the guild, a faction under the control of Xagnus the Animated had begun capturing demons in ritual vaults beneath the city. During a heated argument with his assistant Ambrosia, one of the demons was freed, who in turned freed the rest. Chaos and slaughter ensued.

As his final act at the cost of his life, Xagnus funneled his power and soul into a magical stasis field containing the demons and city within.

Last winter - 500 years after it's creation - the stasis field fell. With the spring thaw, imps and winged beasts harassed nearby villages and towns. Factions from across the provinces (and beyond) began exploration of the city's edge.