How about... Souls have a dead body somewhere. Ghosts don't have a related body anymore. Spirits never had a body to begin with. 

And, let's not forget spectres. Where do they fit?
Tosha spirits...
Those terms are being used as synonyms.

I cannot define undead now.
Liches are undead. Yet they have a heartbeat, bleed, have to eat, sleep and breathe. They feel pain.
Then there are skeletons and they're also considered undead. 

So, what does 'undead' actually mean?

Lich=sentient undead
Skeletons=in/unsentient what ever its called undead

Same way you have a sentient animal ie humans/taefae/merians and un/insentient animals snake, toad etc

Would that work to make it better to understand Like different classes of undead?

Actually, a clever person ingame had the idea of referring to the 'bad undead' as Ur'dead, so that it didn't get confusing. I might just try and go with that. So Liches, skeletons, zombies, puppetmasters, Brennan & Rowena, etc... we can call Ur'dead.

Spirits and spectres are just spirits and spectres.

Who knows. Heh.

Hmm, the ghosts of Paavik's manor are all treated as undead creatures for influence and so on.

I think this is silly. Ghosts aren't undead, they are dead. If the influence thing is a big deal, keep them uninfluenceable without crow cloak/necromancy, but change the message to 'You have no influence with the dead.'

Otherwise, there are too many problems that follow from the classification. Spirits of ancestors (a big thing in Hartstone) that are summoned will have to be called Undead too. Souls after death would be called Undead, so every almost player will have been undead throughout their lifetime.

It is a minor change, but would make much more sense... and make taking an anti-undead stance a -lot- easier.

Are they ghosts or ghasts?

They arn't spirits persay, they are more like "haunting ghosts" that want to be dead rather then spirits that don't want to be dead.

The problem is, almost any argument you make for saying why the Paavik ghosts fall into the category of undead will mean you end up saying other types of critters Serenwilde should be friendly with are undead too.

I just don't like the thought of ghosts being undead, because it raises too many philosophical problems about the nature of death in Lusternia.

I'm not going to enter the debate regarding ghosts, undead and spirits. However I do want to know one thing: What's wrong with philosophical debates regarding the nature of death in Lusternia? Even the gods may have different opinions on the subject! Why does there have to be one right answer? Or for that matter, if you have strong feelings on the matter IC, why would you then even bother listening to any other opinion?

Keep in mind that Urlach was a Vernal God who I think either created or discovered Undead.

Undead status may not equate Evil, at least as philosophy goes.