Were the original William & Thomas real/alive?
It depends on what you're reading. This is a storyline that's made up almost entirely of retcons, so you have to be discerning and recognize which treatments are incongruous with the larger picture. For example, a lot of people get the idea that the babies weren't real from Disassembled or House of M, but in my opinion, that's not a valid reading because those books heavily contradicted Wanda's history and lore in ways that have, since, been mostly walked back-- including the baby stuff.
So, what actually happened? The babies are often described, in the text, as illusions or not real, but the situation is more complicated than that.
In Avengers West Coast, the twins begin to mysteriously flicker in and out of existence when Wanda's attention is diverted. Agatha arrives to investigate the situation, and the compound is attacked by Pandemonium, who kidnaps the children. As the situation unfolds, Agatha continues to ponder the babies' origins. She initially proposes that the they are mere illusions, or manifestations of Wanda's will, but acknowledges that there's something else she's missing. Eventually, the heroes learn that the twins were created from scattered portions of Mephisto's essence. Here's the final conclusion Agatha reaches--
She acknowledges that Wanda used her powers to become actually pregnant, but explains that, since Wanda cannot create true life from nothing, she subconsciously absorbed and transformed the lost pieces of Mephisto in order to give the twins souls. Earlier in the scene, she states that Wanda bound Mephisto's power in the spell she used to create the children. When he absorbed them, they were restored to their original state.
So I think the logical conclusion is that the twins were, in fact real. Agatha acknowledges that Wanda created them-- and gave actual birth-- and that they had souls. The problem is that their souls were made from stolen power, and that their existence itself was bound up in Wanda's magic. I think it's clear, based on this, that the children were more than illusions or even magical constructs-- maybe they weren't real humans, but they had real life. And we know that there was some indelible soul or consciousness left behind when they died-- independent from both Wanda and Mephisto, which is how they were able to be reincarnated.
And just for further context--
In Vision & Scarlet Witch, Wanda becomes pregnant using magic, but, as Doctor Strange confirms, the pregnancy itself was medically, physically real. The conception was also organic, in its own way-- it happened while Wanda was channelling excess magic power, and Vision was there to support and ground her. Wanda later remarks that it was his loving presence that made it possible for her to use that power to conceive, and claims that, "in our own crazy way, we made this child together!" So, originally, the intention was that although her situation was unusual, Wanda's pregnancy was entirely legitimate, and surprisingly normal. And despite the added complexity, I do think Avengers West Coast preserves that fact, even if it kinda undermines the spirit of the story.
