Interestingly, Xehanort actually wanted the forest wolves included as the artificial heartless mooks of the Cycle Visionaires. This was met with skepticism due to the fact the wolves were merely animals of instinct, and not very bright at that despite their ferocity. However, the cunning old man had a solution to rectify the problem: turn them into cybernetic monsters. With help from Dr. Nefarious' Heartless, the combined power of Magic and Science caused the Wolves to be consumed by the Darkness and transform into horrific Heartless adorned with cybernetic enhancements.
They served as Atgonsx's goons, as well as reccuring enforcers of the darkness of Kingdom hearts. Even with Atgonsx's defeat, they were still all over the place, even at the World that never was. It wasn't until everything returned to normal that these monsters turned back into the simple and cowardly wolves they once were due to their bodies being returned to them by the light of the true Kingdom Hearts.