The Nightmare is an incredibly strong ghost, which was originally thought to be the ghost of Leonid Kravos' summoned demon; it is, however, the ghost of Leonid Kravos himself. The ritual that Kravos used to take his life while in prison, combined with the disruption of the barrier between the real world and the Nevernever caused by Mavra's meddling, allowed the Nightmare to become much more powerful than would otherwise been possible.(reference needed)
The Nightmare was created for the sole purpose of vengeance. As a ghost, the Nightmare was created by a powerful emotion at the moment of death. This means that the Nightmare only had power when in pursuit of that goal. When attacking those that captured Leonid Kravos, the Nightmare was able to destroy vehicles, create and sustain a shell during the day and attack people through their dreams.(reference needed)
According to Bob, a ghost can only affect something that relates directly to its death somehow.(reference needed)
In the seriesEdit
In Grave Peril, Harry Dresden is dreaming with perfect recall how he, Michael Carpenter and the SI team led by Karrin Murphy, took down Leonid Kravos. Then the dream changes. Instead of taking him down Carpenter's neck is broken, Murphy is clawed to death, and all the team is killed. The demon broke Dresden's circle and took a huge bite out of him. Dresden was was woken up by Bob inside of Mister.
Dresden has a hard time lighting his candles with the spell he uses everyday. Per Bob, the Nightmare took a big chunk out of Dresden's powers. And he can take on Dresden's appearance.
Dresden realized he's after Murphy next. Dresden calls her, but she's tired and hangs up. Dresden gets there in time to see the Nightmare looking just like him, standing over Murphy with his fingers in her temples. He laughs at Dresden, saying: "I have partaken of thee, I am what thou art". Then he throws one of Dresden's own spells at him and walks out.
The Nightmare abducted Charity Carpenter dragging her to Graceland cemetery. There is a big showdown between Dresden and the Nightmare with the Leanansidhe interjecting herself into it to trick Dresden out of Amoracchius. During the fight, Charity starts to hemorrhage. She is taken to Cook County Hospital—she may not have more children and the infant may not make it.
Michael Carpenter brought Lydia to Harry Dresden's apartment; he recognized her from Leonid Kravos's lair. When Lydia wakes up, she is possessed by the Nightmare. Carpenter cannot slay it with Amoracchius because its inside Lydia—an innocent—not a construct (this would undo the Sword). Just as Dresden is about to die, he finally realizes that Lydia is possessed by Kravos's ghost not his demon and knows how to destroy it. Thomas Raith distracts Lydia by using his White Court–House Raith powers. This frees Dresden to exorcise Kravos's ghost.
Later while locked in a room at Bianca St. Claire's mansion, Kravos inhabits Justine and taunts Dresden. Shortly after, Dresden sets a trap for him, goes to sleep, Kravos enters his mind, Dresden dies, creates a ghost and destroys Kravos, eating back his powers and some of Kravos as well. Susan Rodriguez had been keeping his body going with CPR. After that, Dresden was strong enough to escape their prison taking Susan and Justine with him. 
In Dead Beat, Bob said that when Bianca St. Claire and the Nightmare were tormenting all those ghosts it was Halloween when the barrier between the spirit and mortal worlds is at its weakest. They stirred up those ghosts in order to create turbulence to break down the barrier even more.
In Ghost Story, Harry Dresden warns Murphy that with Mortimer Lindquist having been abducted by the Grey Ghost, he's not around to keep the Lecter Specters—serial killer ghosts—calm and happy which means they'll refer to being killers able to manifest. The could end up with many serial-killer ghosts like the Nightmare (Leonid Kravos) rampaging around Chicago killing. They need to rescue Lindquist.
In Cold Days, the Summer Lady, Lily, implied that the Contagion—later named Nemesis—corrupted Harry Dresden's first three big cases: Victor Sells the Shadowman, Phillip Denton and his Hexenwolves, and Leonid Kravos, The Nightmare.