What exactly was the motivation towards the formation of the Typhon Pact? It's been a while since I read ASD... I know it was stated that the president outbid the Tholians (or something like that) in hiring the aid of the Orion Syndicate for protection against the Borg, but I'm not sure how this inconsequential and seemingly little event should tip the scales far enough for a whole multitude of races to form what seems like it should be an extremely unstable alliance. As is stated, most of these races are extremely xenophobic, so why are they working together? I know it will have something to do with Federation arrogance or some such... With the Federation as bloodied as it's ever been, what is the Pact hoping to achieve?
The motivation differs from member nation to member nation, but essentially most of them simply desired more influence in galactic affairs and presumably got a bit of a shock due to the Borg invasion. Things have been shaken up considerably: the Borg invasion demonstrated once and for all that those who stand alone are vulnerable, while the traditional superpowers, the United Federation of Planets and Klingon Empire, were hit hard and have been reduced in status. The six Typhon Pact members see an opportunity to "step up" and assume the position of local superpower. The Tholians are the only one so far whose motivation is clearly hostile; it was they who took exception to Bacco's outmaneuvering them with the Breen mercenaries (and Orions) and seem to think cold war with the Federation is inevitable. They also seem to want to spite the Federation and essentially say "ha ha, we're more powerful than you now, so you'd better watch out
". The other members don't share this motivation. The Gorn simply seem to want to become more influential, and are not as far as we know hostile (their relationship with the Federation is a good one). The Romulan Star Empire wants to get its own superpower status back after its losses since "Nemesis" reduced it to being dependent on Federation aid (an affront to the proud Romulans, I'm sure). It too is not necessarily hostile, and Ambassador Kavalak displayed gratitude to President Bacco, as I recall. The Kinshaya want protection against Klingon aggression and invasion (and seemingly, gods willing, the opportunity to maybe do some aggressive invading back...). The Breen are still a mystery, but given how their last plan for increased influence failed (the Dominion) and how careful they are anyway I doubt hostility is the primary motivation. The Tzenkethi hate the Federation, but there's no evidence their motivation was anything other the same desire for influence and protection. Tensions are certainly high, and rivalry with the Federation is a certainty, but other than that, we'll have to wait and see.
As for the instability and xenophobia, as others have pointed out in other threads, the Coalition of Planets was no different...