Thanks for responding.

I've decided to keep Dr Evil as the blackmailer forcing the good-guy sidekick to assist him in his evil deeds.

Sidekick becomes a hero (posthumously) when he reveals, in a letter to Dr Evil, recently-aquired evidence of Dr Evil's secret past and states that 'he will not submit to blackmail any longer' - he can't live with his conscience, so he'll take his chances with Dr Evil's threats. So the tables are potentially turned.

We never find out the details of the blackmail because they are both deceased by the time this letter is discovered, it just confirms that Dr Evil was the bad guy and sidekick wasn't.