Namur: Yes, Pete died, or his soul was captured, something along those lines. But time warped back when you beat the Dark Fall. What does that mean ? Well for those in present time it means their souls were never caught by the Dark Fall, so yes, Pete and the other 'victims' (i can't remeber if it's ever explicitly told that Polly and Nigel were caught like Pete was) are alive at the end of the game. For the other victims, the ones taken by the Dark Fall in the past, it simply means their souls were released from the Dark Fall.