Can I make Shimano XTR Shadow 2008 work with road shifters and hydraulic disk brakes

There is no hydro STI that can do the first idea. It would need to be an old cable pull 10 but hydro, and that doesn't exist.

The first obstacle with your FC-M970 in BB86 idea is even if you jank it together with spacers, the bearing contact areas of the spindle won't be in the right place. Also you'll be taking a component where one of the reasons it's so expensive in the first place is the machine work done to remove material everywhere possible, and then you'll be adding extra leverage to the spindle in a place it wasn't designed to take it. Someone may make a conversion BB that does it better, but then you're eating into the money you're trying to save.

Providing you solved the above, published chainline for FC-M970 is 50 and 46.9 for GRX 2x10 rear ends. So you can make that work if you accept having bad chainline. You are also sacrificing Q and will be spending money on rings that play nice with a road FD, or accepting bad performance of ones that don't.

It may be best just to leave the bike as is, and simply knock a hundred bucks or two off the groupset for wear when you sell it. Better than

• A: having to buy a bunch of other parts which will also have to be sold,
• B: potentially riding a janky setup for months which isn’t guaranteed to shift well nor be very reliable with all the cobbled-together parts,
• C: putting wear and tear on your soon-to-be vintage XTR groupset when you can’t even enjoy using it to its full extent, and
• D: your time and effort to do two complete groupset swaps.