The split up between the Mudokons and the Glukkons was over Abe's Moon, which at the time was considered an oracle by the Mudokons signifying that they were the 'Chosen Ones'. The Glukkons didn't like this, and after a bit of meddling about with alchemy, banned religion in Mudos and set up the Magog Cartel. You can find a more fulfilling explanation at
Ask Max.
As for why the Glukkons kept dropping down the rungs of the etiquate ladder, my best guess would be that they got caught up in Oddworld's existing Industrial races, and were forced to create more competion by sheer peer pressure. Either that or their industrialism was the catalyst for the other industrial races entering their own industrial eras, and the Glukkons wanted to stay on top of them all.
Or it could be the Khanzumerz, who are truely evil, that wanted more and more products, and the need for efficiency meant Glukkons slowly forgot their good will.
And as for how Glukkons evolved, their design is based on an ostrich as well as an octopus, so this leads me to believe they evolved from some sort of wading mollusc, like a wader but more, well, molluscular.