Death is also the judge, jury and executioner. Elementals or humans that have caused tremendous grief in their life met a fitting ending — if only temporary. 

When Death transformed the soul, he may decide to transform them into a Shadow Elemental. Shadow Elementals are cursed souls that can no longer interact with the physical world but are part of it. They live in the shadows and are torn apart in light. 
If they are destroyed by light, they are continuously reborn until Death has determined that they have paid for their sins. The only way that they can really bother someone is through their dreams. Even then, they can’t physically touch you. 

Because of all of the trouble he caused, Death denied Malochi the transformation to an elemental but made him a Shadow Elemental. He was cursed to never be part of the world and
could only watch as all that he built crumbled away and slipped into the past.