As I understand it, the timeline is as follows:

Shannon had experiences in her apartment that led to New England Paranormal doing several investigations there. Through this initial interaction she became even more interested in the paranormal and became an active member of New England Paranormal, which then either merged with TAPS or had some sort of brotherly relationship with them.

Shannon was (I think) featured in a couple of season 1 or 2 Ghost Hunters episodes alongside Jason & Grant, and through her interaction with them became one of the investigators recommended for the GHI sister show during the planning stages. In the meantime, Penn State's PRS was looking for places to investigate for their new show, Paranormal State, and someone recommended Shannon's apartment. I'm not clear on whether their investigation took place before or after Shannon went to Europe to investigate with GHI for the first time, but it almost certainly took place before any GHI episodes had aired.

Admittedly, some of this is me filling in the blanks with whatever seems to make the most sense, but I think that's probably a reasonably accurate picture of what Shannon's story is or was. As for her leaving GHI, there are lots of things we could speculate about: Maybe the producers saw the lawsuit or other extracurricular activities and decided she might hurt the show down the line. Maybe going on Paranormal State violated her contract. Maybe they decided her presence didn't really add anything to the show.

If you'll recall, she had also gotten into a pretty emotional argument with Donna over the way Donna was doing EVPs. Frankly, I thought Shannon was dead-on in her point but the end result was that Robb did a crappy job of settling the dispute and it seemed that tension didn't go away; I don't think Donna & Shannon were paired off together after that and there may have even been general tension within the group over this issue behind the scenes, when traveling etc. When it comes down to it, Donna has the seniority and the better-defined role within the team so if one of them had to go it wasn't going to be Donna.

It could have been a combination of any number of these things or even something we don't know about. I don't think it really matters. In a nutshell, I thought Shannon might have looked (and been) incredibly scared pretty much all the time but I don't recall seeing her completely lose her nerve and run (unlike Barry). I thought she worked very hard to contribute to the team and in the argument with Donna I thought she was absolutely right and if there was any tension after that I place the blame squarely on Robb's leadership.

All of that being said, having not watching GHI for six some-odd months and then watching the Larnach Castle investigation — and if you read my review you may notice this — I didn't even notice she was gone. I had forgotten she even existed until gem commented about her being off the show. When I noticed that Brian was still on the team I genuinely thought, "Oh, I guess they just added a member without removing anyone."

I feel kind of bad about that, but to me that's basically proof that as much as I think Shannon tried hard and as much as I don't think she did nearly as many "stupid" things as some of her teammates, she just didn't really add very much to the show. Call it "stage presence", I dunno but to me I think Shannon deserves a lot more respect than say, Brian, but there is no denying that Brian gets fans emotionally involved with the show (love him or hate him) while Shannon did not.

So, while taking Shannon off the show is undoubtedly (in my mind) the right move for the producers, whatever the reason, I hope she find success elsewhere because I do genuinely think she's worthy of more respect than many fans realize.

It's entirely possible that I'm misremembering. What I'm fairly sure of is that she got involved with New England Paranormal after they investigated her apartment and that she got involved with TAPS (and GHI) through New England Paranormal.

There was obviously a lot of hullbaloo about her appearance on PS — I even saw an article that headlined something along the lines of: GHOST HUNTERS MEMBER GOES TO PARANORMAL STATE TEAM FOR HELP but considering her story (re: the "paranormal" community) seems to begin with her apartment being haunted I suspect this was entirely on-the-level and probably resulted from PRS asking around looking for a "gig" rather than Shannon seeking them out — although again, on this I could be wrong.

Ultimately, I think she got a bit of an undeserved bad rap. As you pointed out, she would seem frozen with fear on occasion and it was unbecoming of a paranormal investigator. I would argue it's even less becoming when Barry yelled, "Run!" and then ran like he was being chased by the Hound of the Baskervilles, but Barry's fear entertained while Shannon's did not.

The irony here is that if she had given in to her fear and acted completely unprofessionally like the stereotypical "scared little girl" and spent her air-time screaming, crying and running away from shadows it would have engaged the audience more. I'm rather glad she didn't, because that might have irritated me more than Brian, but from the producer's standpoint (and very likely a ratings standpoint) she would have lent more to the show.