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The library is the goal in a long quest for information on The Beyond. I have a Lovecraftian background to my campaign, and various cults and pre human races have left snippets of information. The PCs now see themselves as tasked with protecting the world from They Beyond, and are desperately seeking out as much information as possible, so I wanted a horde of secret lore for them to eventually find. Of course, the library works as a location in any campaign, simply switch the reasons for finding it to something more suitable.
I have seeded mentions of the Lost Library over many play sessions. It has become one of the main regrets of scholars throughout the Known World that the location of the Library is no longer known. This has only increased the desire of the players to be the ones to find it. Finally following clues involving shape changing Serpent Kin and the last quest of one of the characters' fathers, they have found it.

Some History of the Lost Library

by mister c

The library was originally founded in Alphatia, about a generation after Landfall, by a scholar who became fascinated by this world's Immortals. he was drawn to follow Ixion, which made him a bit of an outcast among his people. (I use Ixion as the Patron of Knowledge, a sect called the Torchbearers honour him as the bearer of the light of knowledge). he traveled the world seeking knowledge and may even have been involved in the library mentioned in Dragonlord of Mystara in the Flaemish capital (in which case he must have operated undercover).
Over time, as he greatly extended his lifespan he gathered a group of like minded followers. Their collection of books was moved from location to location, eventually settling in the Great Waste about the time the Ylari nomads moved in.
Unknown to all, the library was part of his attempt at immortality. He was able to duel rival wizards with competitions of knowledge (stretching it a bit i know, but it works for me) until he was eventually defeated.
As his quest was secret, the rest of the Torchbearers simply mourned him and got on with increasing the size of their collection.
Using a local tribe, the Taabians, (cos i couldn't think of a better name at the time) as staff, guards etc, they became the greatest repository of knowledge in the Known World (unless the Dragons know better). But as different scholars took the post of Head Librarian the ethos changed from 'knowledge for all' to 'knowledge is power'. Select scholars were still permitted to visit, but the order became more secretive and the Taabian tribe departed.
Apart from the collection of everyday books, the Torchbearers also collected hidden and secret knowledge, including much lore on the Outer Beings and The Beyond. Inevitably this collection attracted the attention of powerful beings who would rather it were destroyed, and eventually one of their agents infiltrated the library and brought about its downfall. In the years that passed its location was lost, indeed some say it never existed at all and is merely a metaphor for the endless quest for knowledge.

Hope this helps, all pretty derivative (I forget who came up with the Outer Beings, Mystara's Great Old Ones, but thanks), but it works for us, and feel free to plunder it for anything you want.
BTW if you want to follow the player's progress (or lack thereof) the adventure log is here.
Note they don't always get it right, and some of the 'facts' stated are mere supposition. Enjoy.