Behold the Beholder
Classic fantasy based, preferably Western culture originating.
The Beholder is a staple of Western fantasy gaming, one of the few creatures Wizards of the Coast and its predecessorpredecessors have almost always considered to be Product Identity.
They can't be a standard biped race, humans and elves are so last millennium.
Oh, the beholder is not any -ped. It's a floating orb, with quite a number of magical eyes and an ugly mouth. Being a true classic, an aging rock star of fantasy gaming, it's also last millennium, mind you.
Not a dragon or a dragon clone.
Check.
Living. Breathing. The important point of this is to find a living breathing being that can shake the players from thinking that their race (elves in this case) are the peak lifeform on this world.
A beholder lives and breathes, though it's a magical creature, obviously -- just like dragons and sphinxes and so on. It can definitely shake anyone (even a dragon, I think) who thinks they're the apex predator. Its eyes radiate anti-magic, can turn you into stone, disintegrate you with a blink, and so on -- few other creatures can do that.
Lone being. It needs no mate, consort or even any others of its race, certainly not for decades or centuries at a time.
Check.
An intelligent being that can be reasoned with. Diplomacy with this being should definitely be possible.
Beholders possess high intelligence, and can be reasoned with... if you can convince them that you pose some kind of threat to them, directly or indirectly, and that you can't be dealt with summarily. A Beholder is highly ambitious and evil, but not stupidly evil, and would love to dominate your kingdoms. And your elves. :)