It was made soon after Glaurung first emerged from Angband (First Age 260). The helm itself was not actually shaped like Glaurung -- it merely had a crest shaped in the form of Glaurung's head, which was gilded.

: Another possible reason which has occurred to me is was it an
: apotropaic symbol. This is the use of a frightening image to
: avert evil. Mediaeval churches had gargoyles and monstrous
: images on the outside to frighten away evil spirits. Could the
: dragon on the helm have had a similar use?

I can accept without argument the notion that Tolkien might indeed have been drawing on Anglo-Saxon influences in letting the Dwarf-smith Telchar put a dragoncrest on the helm (it would be absurd to discount A-S influence in all areas of Middle-earth), but I draw the line at Medieval mysticism and superstition unless there is some textual support for the notion.

Tolkien seemed to delight in reworking the old folklore traditions, but there is nothing like a gargoylic architecture or artistry in Middle-earth of which I'm aware (and I base that statement on what I've seen of Tolkien's own artwork).

"Narn i Hin Hurin" says Telchar put the crest on the helm in defiance of Glaurung. I would say that, since he made it for Azaghal of Belegost, it was a sort of mark of prey -- Azaghal in donning the helm would be saying, "I hunt this beast". And as it turned out, Turin, the last owner of the helm, did hunt and slay Glaurung.

I'm sure I've seen a word to describe that sort of hunting tradition, but dang me if I can think of it.

Anyway, it may not have been intended so much to safeguard against evil as to mark it for the hunt. This vaguely reminds me of a shamanistic perspective, but I'm not sure I'm remembering that correctly. It's possibly a clue to Dwarven mysticism, when considered in this light.

------------------
Parma Endorion: Essays on Middle-earth, Revised Edition