Nova Terra Interregnum
Nova Terra Interregnum is one of the major time periods of the Imperium of Man stretching from mid-M34 to the beginning of M36. It was preceded by the Forging (M32-M34) and followed by the Age of Apostasy (M36-M37).
During this time period, the leaders of Nova Terra declared themselves independent of the High Lords of Terra, and the Imperium was split in twain, though in reality it would have been a three way struggle politically between the Secessionists, the High Lords of the Imperium and the Ecclesiarchy.
Despite the fact this sounds Awesome, there is little fluff around it, mostly because it doesn't have anything to do with most of the current major factions, besides the Ecclesiarchy. So most of what we know has been pieced from several sources.
It should be pointed out that the framework for the Imperium was pretty poor during this time, and looked nothing like the 40k Imperium. The Ecclesiarchy wasn't a unified whole, but the largest faction consisted of the Temple of the Saviour Emperor which had a seat on the High Lords of Terra and was in the middle of eroding all of the power and tax money from the Administratum (eventually leading into the Age of Apostasy).
One example of the idiocy of this time is that the Ecclesiarchy nearly bankrupted the Imperium by moving the seat of power from Terra to Ophelia VII and then back again, just to prove a point to the Administratum that it shouldn't fuck with the church (hilariously, this is based on a real incident in the history of the Roman Catholic Church). During that time of separation the church had also built on their Frateris Templar to the point that it now supposedly rivalled the size of the Imperial Guard.
So essentially while the High Lords or Terra might have started out by echoing the original Council of Terra which had managed bureaucracy for the Great Crusade and had presumably stayed there following the Emperor's enthronement following the Horus Heresy, it was probably now in a worse state than it would become by the current 40k, since religion was even more relevant and the actual government had very little power.
Similarly, the Inquisition was concerning itself with mostly Daemons, Aliens and rogue Assassins, since the Ordo Hereticus wasn't invented yet. So the concept of religious "freedom" also goes hand-in-hand with excess.
The Main Event
Therefore when someone on the planet Nova-Terra had the wise idea to split from the Imperium and form their own council in the Segmentum Pacificus, we can probably sympathize that the idea of separating itself from all of the religious furore spouting from Terra and establishing a more micro government that was of a more appropriate "local" scale seems like a good idea. But this writing comes from GW so anything resembling common sense has to be purged with fire, and that's pretty much exactly what happened, though the Ur-Council made a good shot of it and ruled the segmentum for over 900 years.
Most of what we know about the Ur-Council tends to be in fluff surrounding the Dark Angels and there are strong hints that Cypher, being supported by other Fallen Angels, was one of the Ur-Council's leaders, and the Dark Angels were particularly active during this period. This is also where the Praetor launcher came from.
The Cataclysm of Souls
An awesome-sounding but sadly limited piece of fluff, the Cataclysm of Souls was a period of religious wars at the end of M35, when the Ecclesiarchy reshaped the Imperium as a religious state and marked the end of the Nova Terra Interregnum. It is not entirely known what happened during this period, though it is remarked that it was a time of civil war the likes of which had not been encountered since the Horus Heresy.
Not only was the Ecclesiarchy attempting to supplant common sense with religious blindness during this period, but the Adeptus Mechanicus was having its own problems too. Somewhere on the Forge World of Moirae in the galactic North, someone remembered that at some point, the Mechanicum were supposed to be worshiping the Emperor in his aspect as the Omnissiah and started making "radical" assertions that the Cult Mechanicus and the Ecclesiarchy should be unified into a single whole, and even presented mathematical evidence based on fluctuations on the energies given out by the Astronomican which were purported to predict the future.
In a different time, the Mechanicus would have squashed this sub-cult as heretical, but because the Imperium was itself in the grip of religious hysteria surrounding the Emperor, the idea actually took root and spread throughout the galaxy, even among some Space Marine Chapters such as the Iron Hands. Eventually this ideology would spark its own civil war; the first casualty of which was the world of Moirae itself, which was bombed to oblivion by the Martians, the mechanicus once again showing their trademark directness when faced with a problem.
The conflict would last for over a millennium -actually longer than the Nova Terra Interregnum itself- although it is not quite made clear how it ended, other than that many of the radicals were brought back into the fold of the "core" Cult Mechanicus. As for others, such as the Iron Hands, the separatists were permitted to go their own way and form their own separate chapter named the Sons of Medusa.
The 21st Founding happened shortly after the Nova Terra Interregnum and was supposedly the largest founding since the Second Founding. Unfortunately those created by this Founding were wracked with some Awesome mutations. Afterwards the the majority of Chapters created in this founding got wiped out by the Grey Knights.
While the Inquisition and the Grey Knights did start going around offing any the 21st founding chapters that went over the line (Flame Falcons for example), others escaped or have toed the line enough they are tolerated by the Inquisition if only barely. The Blood Gorgons turned traitor and fled to hook up with Chaos while the Black Dragons, Minotaurs, Lamenters, and Sons of Antaeus are all still on active service. The Fire Hawks would later become the Legion of the Damned.