There are basically two reasons why a DM would introduce one of his own old PC's as an NPC. First, he simply liked the character, the backstory and his exploits as an adventurer and thought he would make a good NPC with that as a basis. Second is that the DM is MORE interested in his old PC than in his current campaign and the PC's that are in it, wanting to see the continuation of his old PC's adventures rather than creating new, interesting adventures for the players. Obviously that second possibility is Not Good. But as a rule it isn't going to matter WHERE an NPC comes from if the DM is truly only using the character as an NPC and not as the abusable DM-PC.
Edit:
Just wanted to add that one of the highest compliments you can be paid is to have your ideas borrowed. Your former PC is used as an NPC by another DM. Your NPC is made into a PC by a player. Your entire campaign, PC's, NPC's, and everything else is used as the basis of ANOTHER campaign because the borrower enjoyed it so much. So, unless your motivation is personal aggrandizement there's nothing wrong with borrowing your OWN good ideas and re-using them. I've seen players re-use the same PC in several different campaigns - each version being different, yet all effectively the same PC. That's hardly a problem so long as other players aren't put off by it: "You're running Golfboll AGAIN! Geez, try something new for a change will you?"
Old PC's recycled as NPC's can actually provide the side benefit to the DM of being able to enjoy seeing the old PC in a new light. For example a loner, wanderer PC finally settles down and mixes company a little as an NPC. A PC who was embittered at having been driven out of his party is now more philosophical and helpful to THIS party as an NPC. A PC who was always teased for being a goody-two-shoes is now an NPC who is harsh, vengeful, and unyielding.