Arright, bear with me. There was this company, Umbrella. They messed with genetics and stuff, creating a nasty piece of work, the T Virus, in their quest to make the ultimate killing machine, the Tyrant. However, it turned people into zombies. Raccoon City was where the outbreak happened, and it all turned to shit so the US Government nuked the place. Umbrella was broken up and nuetered. The End.
RE4 follows a tangent from the previous titles, featuring a couple of old characters in a new setting. Leon, being a kickarse special forces guy, is sent to save the President's daughter, who's been taken to somewhere in Europe. As for the villiagers, it's not the T-Virus that makes them want to eat your delicious braiiinnnnsss...