McFadden came into the Motherwell team as a teenager just before the club went into administration and subsequently found himself the talisman of a team that battled against relegation.
Motherwell finished bottom of the Scottish Premier League in 2003, avoiding relegation because Falkirk did not have a compliant stadium, just before McFadden departed for Everton in a £1.25million deal that helped the club emerge from administration.
And he is keen to help Stuart McCall's team continue their progress since then by keeping them in runners-up spot after joining on a short-term deal in midweek.
The 29-year-old said: "The difference has been phenomenal. Obviously I was here when the club went into administration.
"I don't think anyone thought it at the time but it was probably the best thing that happened to the club because they managed to get a bit of stability after that and build on it year after year.
"Obviously the current manager has done an excellent job but I think every manager that's been in has done pretty well since I left."
Like captain Keith Lasley and vice-captain Stevie Hammell, McFadden has returned to his first club following a spell in England.
"The three of us were here at the same time before and went through some difficult times," he said.
"It's not the biggest club but it's a good wee club. It's a good family club and they look after you.
"There is a pull to come back. That's why I said when I left that I would always come back. I didn't know when that would be but I'm back now and I'm looking forward to the challenge."
McFadden played for the last 20 minutes in Motherwell's 1-0 defeat by Dundee United on Tuesday night and is set to start on the bench again when Motherwell face Ross County on Saturday.
And the Scotland international admits he will have to work hard to win his place in the team.
"I feel fine, obviously it would be difficult for me (to play 90 minutes) because I've not played but I would manage to get through it," he said.
"It will probably take maybe two or three games to get to a level I'd be happy with but I feel good. I'm training well and I'm ready whenever I'm needed.
"The team's been playing well and flying high in the league and it's a challenge for me to get in the team.
"I'm sure the players that are in the starting positions will be up for the challenge and it will be up to me to force my way back in the team."