I remember reading somewhere that shadows cards are not considered in play, but I don't remember if the player still 'controls them.' Basically I am wondering does having a neutral card in shadows make Bear Island not usable?

It is generally more useful to think of cards in your Shadows area more like cards in your hand than cards in play. So think of it this way: if you have a neutral card in your hand, does that stop you from using Bear Island?

Whether you are considered to "control" them or not, cards in Shadows are not in play and thus cannot affect the game (short of the rules/effects that specifically let you play them/put them into play). More to the point, how does anyone other than you know whether the cards you have in Shadows are neutral or not? Just from a logic standpoint, hidden information cannot be used to prove (or disprove) play restrictions.