Glaurung, the first dragon, was probably a fallen Maia (demon) in serpentine fana (corporeal form), in which he could sire all subsequent generations of the Dragon-kind, but these dragons were simply highly intellectual and powerful animals under Morgoth's control.

This is the easiest possible explanation. As we see from the example of Melian, the Maiar can copulate and reproduce, but in this case their spirit, as Tolkien himself was reasoning it in the text labelled Ósanwe-kenta, will become earth-bound, lacking the ability to shift into pure spiritual state.

Likely one of the Maia corrupted during the discord of Melkor, twisted by Dark magic into the form of Fana (Serpent).

Yeah, I'm not sure there is much evidence that Glaurung was a Maiar... the main reason is that there would need to be a good reason Glaurung got stuck in dragon form.

The traditional explanation of the origin of dragons is that Morgoth started tinkering with lizards over countless generations and millennia, making them bigger and smarter. I think people have the idea that the Secret Fire is the key to intelligence or sentience, but I think based on what is written, that is mostly an assumption of fans. Many creatures already had life and some level of intelligence, but maybe not to the level of the Children of Iluvatar or dwarves. Melkor, being probably the greatest of the Ainur, may mave been capable of giving dragons intelligence by sacrificing a bit of his essence to "boost" them, unlike the other Ainur or Valar. Morgoth didn't create just dragons, but orcs, trolls, and many other fell creatures who demonstrated various level of intelligence.

I don't discount the Maia theory, I just don't think it has much backing it up. The weakness in the "boost" theory is that dragons seemed too intelligent especially considering Glaurung and Smaug. However, unlike dwarves and the Children of Iluvatar, dragons for all their intelligence built nothing and left no monuments representing their intelligence.

Glaurung being a Maiar is a cooler theory tho

And maybe he's in dragon form because he thinks it's cool

Everyone is free to like a theory because it is cool, but it doesn't make it a good theory.

Fandyllic the Secret Flame is responsible for creation itself, not inteligent beings specifically. I think there is many examples through the books of inteligent animals who were not Maiar or twisted by magic. Like the horses of Beorn, the fox that cross Frodo &co on their first night outside the Shire and that we can read his thoughts about how strange it is to a group of Hobbits out of the Shire. Or the Ravens of Erebor and the thrush (is that correct ?) the bird that warn Bard of Smaug weakness. Heck, the Huorns were literally simples trees before the elves teached them to speak.

In fact, it does implied that every creatures living on Middle-Earth is intelligent, just generally not capable of speech.

I think Glaurung being a Maiar makes the most sense. Morgoth twisted elves and ents into orcs and trolls, but I don't really see where he could breed or twist dragons from.

WizardWarrior1 Actually, it's hinted he made the trolls from stones. Which is logical because they don't seems made of wood and turned back to stone in sunlight.

I don't think that's true for two reasons:

1. There's no way he was able to create sentient beings from just stone.

2. One of the books actually says Morgoth created trolls from ents.