From what I read, he died before Arthas's corruption into a deathknight.

Umm...the reason he didn't kill Arthas, was, and I'm not saying it's the full reason, but Arthas, technically isn't dead...He is still a living breathing human, that has immense power, kind of like Illidan. He's still a Night Elf with Demonic Powers and features. Ashbringer, COULD kill Arthas, but remember, Arthas was the king of Lordaeron. This is a theory, but in the medieval times, if a King dies the prince would become king. Well, Prince Arthas, killed his father, and became respected king of Lordaeron. And his people knew how powerful he was, so if they tried to kill him, they'd be screwed over. Mograine was all the way in Southfall around the time of Arthas betrayal. After creating Ashbringer, he went up to EPL and WPL and was killing the Undead that Arthas didn't kill when he was on his way to Stratholme. I'm sure he was pretty busy with all of the Undead their too...I mean, it is currently, by means of technicality, the Scourge capital on Azeroth. Atleast until Northrend opens up.

It's hard to say what Mograine was doing when the initial Scourge invasion happens. Remember, Arthas disbanded the Knights of the Silver Hand, so Mograine was likely not in full contact with his other righteous buddies when he got back. And then Arthas threw the whole kingdom into chaos because he killed Terenas without an actual invasion- no king, no heir, no clear rulership of the country.

I mean, Mograine was one dude. He probably killed a whole lot of Scourge when he got the chance to, but by the time he knew the Scourge was attacking his land it was already probably too late.

-E

The first chapter of the Undead campaign in Warcraft 3 mentions how Lordaeron got owned and such, and that Arthas has yet to be seen. Before you got decently leveled up, most of the Undead campaign was focused on stealth. Before leaving for Kalimdor, Arthas didn't let anyone see him, at least before killing then.