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In a parallel universe when the Valeyard won in his battle with the Sixth Doctor, the TARDIS was taken by the Valeyard.
The Valeyard used the TARDIS to go back and rectify what he saw as mistakes made by the Doctor's various incarnations over the centuries - he travelled to Skaro to avert the creation of the Daleks like his Fourth incarnation had failed to do. (TV: Genesis of the Daleks) have the Silurians and Humans make contact earlier in history after the Sixth Doctor encountered them in the Galapagos Islands (AUDIO: Bloodtide), while he collected weapons and technologies the Doctor had locked away or destroyed due to the dangers. One of these items was the Ancient Diadem on the planet Pakha.
It wasn't until the Valeyard rewrote the events which had led the Sixth Doctor to be accused of genocide in the first place that the Time Lords took action against him - before Vansell had argued that the Valeyard would be a better agent than the Doctor, but after these events, it was too late.
The Valeyard commandeered the Doomsday Weapon on Uxarieus and turned it on Gallifrey, destroying the planet. The President and Vansell programmed a Time Ring to send Melanie Bush to kill the Valeyard.
During these events, the Valeyard went to Logopolis to use the mathematical skills of the Logopolitans install the Doomsday Weapon inside his TARDIS, but he remembered the planet was gone after his Fourth incarnation had accidentally led the Master there. The Valeyard accidentally time rammed the Fourth Doctor's TARDIS along with the Master's TARDIS on its way to Logopolis, causing the Grandfather paradox.
This was the culmination of tremendous damage caused by the Valeyard's meddling with time - he tried to stop himself going to Logopolis, but instead inspired his younger self in going there in the first place. When Mel materialised in the Valeyard's TARDIS, the Valeyard killed Ellie Martin, a human who was travelling and assisting him, in cold blood.
In an illusion, the Valeyard ripped off the time ring and pushed Mel out of the TARDIS where they would meet again in the city of Chronopolis, which would sit in the heart of the Time Vortex, allowing him to cross time and alter/destroy anything he liked.
In truth, Mel and the Valeyard had not left the TARDIS. The Valeyard had become so frightened of changing history, he is afraid to move. Chronopolis was an illusion, generated by the last of the TARDIS's energy.
The TARDIS has created the illusion through possibility projectors to keep the Valeyard safe from himself, using all the energy it has until every room aside from the console room has been jettisoned. The TARDIS is dying but the only thing keeping it alive is the symbiotic link it has with the Valeyard.
Mel and the Valeyard were then frozen while the universe worked to repair itself from the Valeyard's damage. (AUDIO: He Jests at Scars...)