I think he was either alive or undead. Undead most likely. Supposedly the first flame "brought disparity" including life and death.
Nito is identified as "the first of the dead" but that doesn't necessarily mean he was the "very first" or "only" dead. My best guess is that, until the flames started everything was in a limbo of sorts between life and death. When the flames arose, most of the Lords and other beings at that point became truly "living" escaping the limbo of their former existence.
Nito on the other hand, represents the other half of the coin of disparity. Where others lived, he represents the ones that died. From his weird amalgamation of bones I think we can say that there is at the least, a dominant entity that is the structure (skeleton? hardee har har) of the being. That may or may not be Nito. "Nito" could also be the being that was created from the amalgamation of the dead. Aka, while there's seemingly a giant skeleton at the core, Nito might be the group and not the singular entity.
This is all my interpretation but this is how I think it fits with traditional mythos:
-Nito appears to be symbolic of the underworld and it's variants which in Christian mythology is called "Hell" obviously. There's a fairly well known demon sighting where, when asked it's name, the demon replies "My name is Legion
, for we are many." The chorus of supernatural beings is commonplace in similar beliefs (angels often come in groups as well as demons, demons also often present as being more than one being even if only one since they like to lie). Now Nito isn't necessarily evil but he's the closest correlation to hellish beings among the lords.
-Extending the idea of limbo or undeath/unlife before the flame there would also not be a heaven or hell or any afterlife prior to the flame. What this means is that, when things started dying their souls were trapped with no afterlife to go to. At some point, the afterlife has to be created. Nito, under this idea, could represent the critical mass of dead. Essentially, the souls of the dead, having nowhere to go, coalesced into one form until it achieved a new entity. The "First of the Dead" in that they represent the dead that had no place to go to. It's been a while since I watched it but I think I first started thinking this idea when I saw the intro video.
-The creation of the afterlife is usually murky in mythology. Valhalla/Hel, Heaven/Hell, or Elysium/Hades all must have come from somewhere but, unlike the lineage of the gods themselves, the locations often seem to just spring up (someone might know the story for some of these to prove this point semi-wrong). What is of note though, is that all of these representations have a few things in common. While the locations don't always have a backstory, the gods do and the rules of the afterlife are generally made by the overseeing deity/deities. So for most mythology, the locations are meaningless without the god(s) attached to it. Since the gods do have a lineage and story attached, the locations of afterlife in their commonly known form are correlated with the deities. In essence, Hell isn't Hell until Satan starts presiding. Hel can't be Hel without Hel. Hades wouldn't be Hades without Hades. Heaven is meaningless without God and angels, Valhalla requires Valkyries and gods. So the Dark Soul creation story fits these nicely. There is no death or afterlife until Nito is arisen. From a numbers game it's also interesting that the darker side of death is usually presided over by one god (or fewer at least) while the divine side generally has many (or more than the other side).