Not sure if this is supposed to be like this, but the negative plane avatar for Death Domain does not count as an undead (at least the one for orcus doesn't). It can be healed normally and with herbs, and takes damage from negative energy.
Dependant on the deity, the Avatar should certainly not always be counted as undead and will be fitting to the theme :)
Surely in this case, Orcus (the so-called "master of undead") should have an avatar that is counted as undead
No, in this case this is working as intended :)