Undead do not eat, do not sleep, do not need to drink, and are biologically immortal (as far as we know). Whether Human or Undead, they are still considered Hollow, though being Hollow and actually "going Hollow" are two different things.
We can assume that one needs to loose their minds to go full Hollow, all the characters in the game we've met so far have been sane and human up until their wills break or their mind snaps. The Player can change between Hollow and Human, so we can assume that NPCs can too. We can also assume that we've really met no humans yet. Humans, as far as I know, don't just poof into soul stuff when they kick the bucket. And their skin doesn't resemble jerky, either.
Now, we've seen a lot of bodies in the game. Many of the people we meet we find their armor here and there. There is even all the armor from all the different classes. But this raises questions. Why are they there? Why didn't the bodies reform? How can Oscar be dead in the Garden, leave messages in Anor Londo and elsewhere, but still warp back and rescue you?
My theory is that when a Human dies, their body is left
behind in a corporeal state, and their soul reforms at a bonfire. This would explain many of the bodies we find. Oscar is in the Garden because he died there as a human.We didn't get his armor back at the Asylum, because it is literally a part of his soul. Quelana is dead, her body is being guarded by her brother and her soul is sitting forlornly outside her sister's lair. Each and every one of the starting characters died in Lordran trying to do something. Havel was dismembered and stuffed into a bunch of boxes in Anor Londo.
There are of course flaws to this theory. I came up with two or three just writing this. But I want to know what you guys think. If you've got any ideas to contribute, by all means. If you can see the flaws, point them out; you might come up with something while explaining why this theory doesn't work.