<good stuff>
Do you think this is still walking a thin line?
P.S. I do plan on incorporating the character's background into the story so it doesn't feel like too much focusing on this one character.
To avoid a railroad, what I do when I prepare a campaign is write some things that I'd like to see (like places to visit and people to see) and events that logically would occur in a certain sequence
if there is no PC intervention.
For example, you mentioned this NPC who wants to become a demon lord. So, you may think that he needs to get X, then Y, then perform the ritual at Z to devolve into a demon lord (and X, Y and Z would generally be performed at each tier).
EDIT: Note that the further out the events are (like events in epic tier) the more "fuzzy" they are and the less likely they will occur (without railroading). So, if the PCs want to explore the far-off crypt next adventure, I prepare the journey to the crypt and the crypt itself b/c that's very likely what they want to do. OTOH, a ritual that must occur in the Shadowfell at Epic Tier is much less likely to happen.
I don't have a problem with writing this "wish list" down b/c it's only purpose is to provide a
direction to the campaign and is not a checklist for PCs to follow. I know this b/c I asked them (after providing some general details) - this is the kind of campaign they want.
Once you have this direction, you have to decide how the PCs might be hooked into the story line and how they can affect it. They really should be able to, otherwise, what's the point of running this as a RPG?
It appears that this character is one you developed, so he's a NPC, correct? Be careful here (as others have mentioned) - you may want to be both "player" and GM and generally that doesn't work IME. The story should put players front and center.
Now, you can have this NPC as an important part of the story - say the main villain. But he shouldn't be adventuring with the PC regularly. He needs "off-screen" time for him to evolve and pursue his schemes. At appropriate times, the PCs will/can/should intervene and send this story into new (and hopefully interesting) directions.
Finally, I followed this approach when I developed my 4e Dark Sun campaign. I had finished the first story arc (the purpose of which was mainly to get me and players familiar with 4e rules) and will be starting season 2 in a few months. Though I had a rough idea of where I wanted to go, PC actions and player preferences have changed the next story arc quite a bit...as it should.