The fairly short answer is:

1) Race-wide spies develop general info that you can see in the "report" box, ship destinations, and such, and are immune to being eliminated.  Info accumulates, but the number of spies (up to 4) make a difference in the max possible intel level.

2) Tile-placed spies stop the improvement from generating anything except its maintenance cost and also have some slight chance of gaining the theft of some technology ffrom the race.  The tile-placed spy's effects last only as long as the spy is there (and not removed by the player or nullified by the opponent).

Also, apparently the probability of stealing a tech is independent of the number of tile-based spies.  IOW, one spy has the same chance as 25 each turn.

Also a note about race-wide spies.  Pull them off a race that is about to die off if at all possible.  There is a current bug that will not let them return to the pool once the race dies out.  And if you got plenty of game left, you'll even go up in intel levels since those spies are still placed on the dead race.  I prefer to call them 'archeologists' at this point.

Other than that, LTjim summed it up pretty well.  More info on them however can be found here https://forums.galciv2.com/316263

Seeing that I never played GC1 I cannot comment on the Drath thing...beyond "are you sure you don't mean the Dregin?"

I guess I could understand the 'evilness' of the Drath when you look at their racial issues with the Good Alterians....