The Lizard Folk, it's his nod to a DND race (the book like the games has many nods to pop culture, literature, fairy tales, and myth). Particularly the Spelljammer variety.
Also keep in mind the Lizardfolk are an earth race descended from our dinosaurs, have little to do with his concept of the world of Daventry, another world in the 'multiverse'. They are primarily brought up when discussing the history of Earth. They are kinda like the Reptites in Chrono Trigger as the original sentient race on Earth before the evolution of mammals. Many may have left earth in space ships, or simply destroyed themselves through use of dark magic that may have brought a large asteroid to earth (a nod to the Cretaceous mass extinction event that wiped out the dinosaurs)
The Hagatha sister among the other KQ5 novel material is something he claims to have directly worked on with Roberta. He got her 'help and blessing' in both first and second editions, and she fully endorsed the book as early as the first edition. She has read through at least the first, second and third editions (though Jane Jensen primarily gave most of the assistence on the KQ6 material in the third).
Other people at Sierra have used the idea since too, as it's brought up in material in the 15th Anniverary Collection, including Josh Mandel...
I suspect it's something like the Society of the Black Cloak, in which Roberta discussed it with Jane Jensen but then forgot about it (the reason they never showed up again). In any case Roberta fully endorsed the books directly claimed the books were a pleasure to read, and were a good way to learn more about the history of her universe, greater depth and detail! She is known to have read them, and said to have given her own input into them. Likewise she has been known to forget ideas that were left on cutting room floor from games, as they were no longer important to her... Such as the idea of making the swamp witch's part in KQ8 a little more important, having her in disguise, etc.
For all intents and purposes the Evil family and the Black Cloaks share nearly the same intent... As far as attempts to try to tie many of the villains together into confederacies...
In contrast she read the three Berkeley novels, and thought they were only ok, not excellent reading.
Also you have to remember Roberta has been known to say she was more concerned with technical side of game making than the story. Story making came second. That's one reason that not all elements in the games match up with each additional game. She was never trying for 'consistent persistent universe', it evolved as her technology permitted it. That's why Daventry changed shape in nearly every game it was shown.
She has also claimed that she always looked forward and never back. That she didn't like looking at her earlier games and preferred to only look at what ever game she was currently working with at any given time. This apparently even went as far as the phases of development and may explain why she absently forgot details of things that ended up cut from games she was currently working on or had just finished.
Btw, I'm not sure the designers other than Mark Crowe had nearly the same involvement with helping with the creation of the Space Quest Companion that Roberta herself did with the KQC. It takes far more liberties, changing names, especially for the sake of humor. They certainly didn't give any endorsement in the manner Roberta did herself, that is one quoted on the cover of the book itself (though the authors claim at least Mark Crowe gave his personal endorsement)... Although I don't know the exact involvement as I don't have a copy of first edition. I do know in second the primary involvement was with Mark Crowe. It may possible that the first edition may include a note of endorsement from one or the other. I just don't know.
But based on what little I know of the second edition, it doesn't sound like Scott Murphy had much involvement with the book at all (and perhaps not even in the previous edition).
However, I have to say personally I don't find it up to nearly the same quality as King's Quest Companion. Each of the novels are much shorter than their KQ counterparts, there aren't any of extra chapters that talk about the world, technology, characters, races, etc (other than an introduction chapter that gives a little bit extra from "Roger's motives" for 'sending files back in time' so his ancestor's will be able to play games based on him)... Then there are the strange and pointless daydreams he has before each chapter, that don't really add much to the stories. There is nothing approaching the quality of additions of maps and artwork found in the King's Quest Companion.
Also if you are against he idea of having every villain in the entire series tied together... Well Peter and Jeremy Spear did it... Yep, Elmo Pugg's full name is Elmo Vohaul Pugg... Rhaems Quirk is the son of Sludge Vohaul's sister ('Lady Vohaul')... etc...
Though the hilarious writing does make it an enjoyable read...