I was reading through some history of Skyrim and it mentioned Roscrea. Appareny it is an island in the Sea of Ghosts which means it is between Tamriel and Atmora. It was once ruled as part of Solitude which suggests it is above Skyrim or it could be slightly west above High Rock.

What has happened to this island and why was it not mentioned in Skyrim?

I reckon it's quite far north, possibly closer to Atmora than Tamriel, given that it was only conquered by Uriel V, better known for his expedition to Akavir. It was not so much "ruled as part of Solitude", rather Solitude took it (without permission, presumably) from Imperial rule:

From the Third Pocket Guide. Seeing as this was at the end of the third era, I would assume that, what with Imperial power basically weakening since then, Roscrea remained the property of Skyrim, or may have become independent. I personally like to think that it was another center of Dunmer refugees along with Solstheim.

Perhaps Solitudes Solstheim?

Some rumors from Oblivion:

I'd like to propose that this was the result of the same expansion we hear about in the Pocket Guide. Though by the High King/Solitude or by one of Solitude's rivals, it remains to be seen. It should be noted that it was the High King who granted Solstheim to the Dunmer, though.

In Morrowind, too, we get a picture of various groups maneuvering to take advantage of the Emperor's imminent demise. It'd make sense that Solitude would be making such potentially hostile moves against the Empire. They smelled blood in the water, and knew the Empire didn't have the power to strike back.