In the Elder Scrolls series, ethereal undead are spirits which may be found haunting any abandoned location. They are frequently, although not exclusively, summoned and commanded by a necromancer. All such undead are immune to poison and normal weapons. Being undead, they lack the normal limitations of man or mer; they can never become fatigued and can fire a seemingly unlimited amount of frost spells at you. Additionally, they have a high frost resistance.
Ghosts and wraiths are the two predominant types of spirit. A ghost's power tends to increase with age, while a wraith's power tends to decrease; however, the weakest wraith is still more powerful than the strongest ghost. Therefore, the ranking order of spirits is Ghost > Ancient Ghost > Faded Wraith > Wraith > Gloom Wraith.
Basic Theory of Ethereal Undead
Ethereal undead essentially consist of two parts: the spirit and the [non-corporeal] body. When a spirit is bound to the mortal realm, whether by choice or by necromantic conjuring, it will generate a body to hold it. This body is not solid, and it is not known how it is produced or what it is produced from. However, we do know that it is sustained by the spirit's magickal field. This magickal field ties the spirit to the non-solid body and the body to the physical realm.
Because this body is not solid, all normal weapons will pass through it. However, silver weapons possess some innate magickal quality, and can as such be used against ethereal undead. This is because the silver makes contact with the magical field sustaining the spirit. When attacking a spirit with a silver weapon, you are not actually hitting it, nor are you hitting its non-corporeal body; you are attacking its lifeline to the physical realm. By the same token, you can attack spirits with enchanted weaponry, to greater or lesser effect. Daedric weapons also effect ethereal undead, though the exact reason why is unknown. It is very likely however, that they possess the same attributes as Silver (being magically charged to a certain extent, even when not enchanted), to a higher degree.
Ethereal undead will "die" when their magickal field has been destroyed through such an attack. The spirit inhabiting the body will go on into some sort of afterlife, and the non-corporeal body will condense into ectoplasm, a substance rich with the strange magickal energies of the undead.
Theory of Welkynd Stones
When a magic wielder holds a Welkynd stone, magicka clearly flows into him from the stone until he is 'full' of magicka. Therefore, we know that a Welkynd stone holds magicka, and that it's possible for the magicka therein to flow out of it into something else. We also know that there is some kind of safeguard in the Welkynd enchantment that stems this flow of magicka before it overwhelms a mage - it doesn't keep flowing into him until he 'bursts,' so to speak. However, current thought indicates that this safeguard does not extend to a second party - for example, if a mage holding a Welkynd stone were to stab another person with it.
Because weapons with inherent magicka can harm the magical fields of the ethereal undead, it is thought that stabbing such a spirit with an extremely magical object, such as a Welkynd stone, will have a similar effect on the spirit. If its magical field has already sustained damage, the flow of magicka from the Welkynd stone will at first heal the field; however, if the magicka continues to flow into the field after it is fully healed, it will begin to overpower the field and break it up.
At the time of writing, this theory is untested, but the principle is sound. The question lies with how long it will take a Welkynd stone to overpower a spirit's magical field, and whether a mage could hold the stone in place long enough to fully complete the task.
Theory of Undead Influence
Though the body of an ethereal undead is non-corporeal, the fact remains that it is able to engage in hand-to-hand combat. Warriors who enter into combat with a wraith may come out scratched and scarred. The current theory is that these scratches and so forth are actually the physical manifestations of psychical attacks.
In telekinesis magic, a mage imposes his will upon an inanimate object to move it around from a distance. Similarly, by sheer force of willpower, an undead spirit can cause your flesh to burn where it touches you or cause scratches to appear when it claws at you, etc. These effects are usually "in sync" with the actions of its non-corpoeal body, but they are in effect bypassing the body entirely. They come straight from the spirit itself.