Naga Sadow's death is not covered in detail in the books I have but either the New Essentially Chronology or Jedi vs Sith say that he was alive when Nadd woke him, but was murdered by him afterward. So presumably it was that which was the reason he had a spirit that the Emperor sought to imprison.
Yeah, I have Jedi vs. Sith and it doesn't cover Naga Sadow's state when Freedon Nadd found him. That's where I got slipped up. I could have grabbed one of my other books, but I had Jedi vs. Sith like right in front of me.
I think Naga Sadow was alive when Nadd found him. Later works seem to point to it.
Edit: Yeah, Jedi versus Sith doesn't give too much detail on Sadow's state, but seems to imply that he was alive. It says that he was in stasis.
Edit #2: Okay, Jedi vs. Sith says that Freedon Nadd apprenticed to Naga Sadow's spirit on Yavin 4. Needs to be revised, maybe?