"Like I said, Yugi, [i]everyone[/i] has a shadow; Yami has his own", for that, the boy's shadow was back, reappearing on the ground near him. Shadow looked back at her master, still giving off a very passive expression in her features. "Your own shadow is in [i]here[/i]", she gestured to his heart, before touching her forehead. "Not up here", meaning the mind. "Yami and I would be up there", the genie clarified, hoping that it would help Yugi understand what she was trying to tell him. 

It would be a major difference between something of the mind and the heart; emotions come from the said-organ, which would make sense for it to hold one's positive [i]and[/i] negative feelings, whereas the mind held the mental energy, where she and the spirit would take refuge in, and take control of Yugi, when necessary. She didn't say anything about her true origins yet; otherwise it would be really confusing for Yugi to even understand how she would fit in with the Millenium Puzzle.