In the beginning they were one race. And they really are still one race. But the seeds for the discord between the two factions of the Arnor came in their creation. One group of the Arnor were created with the ability to perceive time. Their creator considered them superior in believing that the perception of time passing is a key to self-awareness and thus full sentience. The other group was created without a sense of time perception. It was thought that this group would eventually be the servant class of the other group.
The ability to perceive time is something that mortals take for granted. Creatures that live a span of a century or so have no concept of eternity. What would it be like to live 1,000 years? What about 10,000 years? What about 100,000 years? It is believed that what twisted the creator of the Arnor was that alone of the Mithrilar, the Arnorian creator did indeed perceive time and that perception ultimately ruined his spirit.
For a long while, the Arnorians worked together and indeed, the pre-Dread Lord Arnor were the masters and the base-Arnor were the servants. Those who feel the touch of time are more driven to achievement than those who recognize eternity for what it is. But in time, those who became Dread Lords became cruel and malevolent. When new species began to evolve the Dread Lords considered them worthless. What value is a creature that dies in the relative blink of an eye? What level of awareness of sentience can a being achieve in such a short amount of time?
And so ultimately, the only real difference between the Arnor and Dread Lords is the perception of time and its effect on immortal beings.