Yes. They are Death Knights. They have their own will and agency, unlike mindless undead ghouls or skeletons, but they are indeed undead.
The exclusive Death Knight customization options all give a rather corpse-like appearance, I don’t know how your friend could consider them NOT undead after looking at those. Sure the regular skin tones are available, but lore-wise most of the death knight characters we see are pallid and corpse-like.
All Scourge Undead were raised with Domination-enhanced Necromantic Death Magic mixed with Shadow Death Magic and Revendreth Death Magic.
Death Knights are undead, but this isn’t reflected in game mechanics because, like Forsaken, it would’ve given them too many weaknesses compared to other classes. Lorewise, things that effect undead would effect Death Knights (except maybe “Control Undead”).
Biologically, they have what’s needed to move, talk, think and fight along with their five senses. While Ornmus the Penitent was no longer able to see after removing his eyes, there are near-skeletal Death Knights who can see despite a lack of eyes. Healing is supernaturally boosted and they don’t need to sleep but they can (the Scourge forbade it to the point of making it a capital offense).
They can still feel pain, as their “Eternal Hunger” is a literal hunger for inflicting pain on others that causes them pain if they don’t sate it, eventually driving them into a blood-mad hysteria.
They also feel positive emotions for much shorter periods of time and negative emotions for longer periods of time. As for questions of food and sexual function, I don’t know about either and don’t want to consider the latter.
I thought Calia’s legs were just really white, turns out she’s wearing white pants. If i didn’t squint I would have just thought she was wearing a leg revealing dress. but nope she’s wearing pants.