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In 2366, shortly after the first Borg invasion of the Federation, Dr. Soong finished the chip, and summoned Data to his home on Terlina III by activating Data's homing device. The homing device also summoned Lore, who had been rescued by a Pakled ship after being beamed into space over two years earlier. Lore stole the chip by posing as Data, and Soong died from injuries he sustained when Lore attacked him. (TNG episode: "Brothers")
By 2369, Lore had joined with a faction of Borg who had been separated from the overall collective. He used his emotion chip to flood Data's neural net with negative emotions, and was able to also deactivate Data's ethical programs. Lore tried to turn Data to his side in an attempt to destroy the Federation, but when Jean-Luc Picard reactivated Data's ethical programs, Data refused to help anymore. Data was forced to deactivate Lore shortly afterwards, and had the emotion chip salvaged before Lore was dismantled. He planned to destroy the chip, but La Forge convinced him to wait. (TNG episode: "Descent", Part II)
Believing that he had come as far as he possibly could in his understanding of humanity, and fallen short, Data installed the chip in 2371 in an effort push his personal development and evolution further. He experienced a great deal of difficulty intergrating the new emotions, and the chip overloaded in the process, fusing itself into his positronic brain. (TNG movie: Star Trek Generations)
Following the installation of the emotion chip, Data realized that it was slightly loose, and he would often open the panel on the side of his head and play with the loose chip while alone in his quarters. La Forge likened it to a human playing with a loose tooth in his mouth. (TNG - Slings and Arrows eBook: A Sea of Troubles)
In late 2371 or early 2372, Data was approached by Dr. Sofia Borges, a member of the team attempting to further Federation relations with the Tamarians, with the theory that his emotion chip could be used to alter neural patterns to match those of the Tamarians, and thus enable a more direct communication with them. (TNG short story: "Friends With the Sparrows")
Data met semi-regularly with Counselor Deanna Troi in the year following the installation of the chip as he learned to integrate his emotions into his intellectual being. However, while trying to help Geordi La Forge with an emotional struggle of his own, Data became frustrated with his continued lack of control of his emotions, and designed a new circuit which would effectively allow him to activate and deactivate the chip. (TNG - Slings and Arrows eBook: The Insolence of Office)
This ability came into play when the Borg had invaded the USS Enterprise-E in 2373. After Picard suggested that Data deactivate the chip, the captain remarked that at times he envied the android. Data was later captured by the Borg Queen, who reactivated the chip and used a variety of sensations -- such as real flesh and sexual contact -- in an attempt to turn Data to her side. She failed to turn him, though, and Data proved insturmental in defeating the Queen. (TNG movie: Star Trek: First Contact)
In 2378, following the accidental destruction of the USS Juno, Starfleet ordered the removal and confiscation of the emotion chip, on the theory that it had improperly affected Data's behavior. (TNG novels: A Time to Be Born, A Time to Die)