What happened to the Engineers is not explained clearly in the movie, but one might make speculations from what is actually shown (I like the "black goo" expression for the substance :-) :
- the hologram of the Engineer running in the corridor, the body of the
one severed by the hatch
- the result of trying to revive an Engineer('s detached head) : a biological "explosion"
- the result of a Human parasited by the "black goo snake" : a murderous "undead" monster
- the result of a Human "poisoned" by the black goo itself : some form of monster mutation also
- the result of a Human woman indirectly contaminated by the black goo through intercourse : a monster progeny
One may thus suppose that the Engineers created the black goo as a biological weapon, aiming to destroy the Human race that they initially created. However their experiments somehow backfired and they were contaminated and destroyed (except the one who went into stasis/cryo-sleep/whatever) or maybe some also managed to escape.
The "black goo snake" could be a mutation of some life form indigenous or that they brought with them, a result of experimenting on some form of "lab rats", or a result of initial Engineer contamination.
And "the" Alien (xenomorph) as seen in "later" (filmed earlier) Alien movies is only "born" from the Engineer('s consumed innards, like in Alien movies) that was attacked and parasited by the monster "born" from a Human woman('s womb), herself contaminated through intercourse, etc...