That's because Fane is not undead and he looks at other races as a researcher would look at monkeys.
I'm not sure that the first bit is accurate, while the second most certainly is.
- Fane looks like an undead.
- He has the 'undead' tag.
- The game identifies him as an undead creature.
- He shares all the mechanics with undead NPCs (e.g. heals from poison, suffers from heals).
- He even has conversations where he replies as an undead. (Don't want to spoil, but the graveyard philosopher comes to mind.)
If it looks like a chicken, if it tastes like chicken, and if it squawks like a chicken, then... well... it might just be a chicken. Well, preferably in reverse order to be sure, otherwise you'd be talking about an undead chicken.
The caveat is that I haven't completed the game yet, so maybe there's some big reveal coming. But at least for now, for all intents and purposes he is an undead Eternal.
Re: OT: I had expected a bit more there, too. But then I wasn't terribly impressed with how Gratiana was handled anyway; I would really have hoped for more conversation options to confront her about her past. Plus I ran into her recharge bug too, so I tried to forget that whole situation pretty fast
