Muslims believe that Lucifer, Satan, Shaitan, Iblis, etc. was not an Angel, but a Jinni. The Jinn were created by Allah and are made from smokeless fire. Shaitan was present when Allah asked the Angels to prostrate to Adam, but but he was arrogant and refused to prostrate, boasting that he was made from fire, while Adam was made from clay. He asked Allah to allow him to decieve mankind, to show Him how untrustworthy and bad humans were. Allah accepted, saying he would live till the Day of Judgement.
Jinn can possess people, but only rarely.
Also, Angels cannot disobey Allah.