You see a glimpse of Melchiah in the opening cutscene, and again later on his visage carved into stone of what he looks like. You can see the scars of his skin being patched and stitched together to maintain his form. It's clear how much he's barely keeping it all together in his 3d renders

The state you see him in at this point is further contrasted in Soul Reaver 2 between being a human vs a vampire.

He was similar in build to his Sarafan Brethren. This is probably a byproduct of reusing base models and animations to economize the game scope and pipeline, but regardless we also see how he looks in his mural. Compared to his vampire form, his neck and body shows signs of bloating from the internal decomposition as well.

Raziel's voice over further reinforces this:

"My brother, Melchiah, was made last, and therefore received the poorest portion of Kain’s gift. Although immortal, his soul could not sustain the flesh, which retained much of its previous human frailty.

This weakness, it seemed, was passed on to his offspring. Their fragile skins barely contained the underlying decay."

Due to his soul barely being tethered to his body, it was never enough for him to have the same regeneration as his other brethren. This unfortunately lead to the devolved state we see him in, centuries after Raziel awoke from the abyss

Over time he grew to a hulking mass horror, developing bony spikes and spines, but that didnt prevent his body from further deterioration. Still having to compensate for his rotting flesh, he had to resort to grafting whole parts and bodies to maintain his larger physique. And yet it wasn't enough to outpace his deterioration. His lower body is lost leaving a spine like slug of a tail, bones and muscles exposed, his metal mask (what I like to think) replacing pieces of his skull broken off from vampire hunters trying to kill him. Heck, it looks like his brain is exposed underneath his mask.

You can also tell how he is unable to reinforce parts of his body that is difficult for him to reach. Striking him at the front leaves him laughing at your attempts, while attacking him from behind leaves him screaming in pain similar to being skewered by the gates. Small things like that suggests that maybe even his nervous system has become more and more exposed due to the difficulty in reaching those areas.

Because Melchiah was in a constant state of decay, walking a fine line of unlife and death, I like to interpret this as him inadvertantly breaching the spectral realm on a regular basis. This lead to him adapting to his environment and thus developing his ability to phase through gated barriers.

You can even see him doing this in game during his fight. If you shift or get knocked into the spectral realm, he follows you there and pursues you. When he gets close enough he becomes more corporeal (as much as you can be in the spectral realm) to take a swing at you, before phasing out again.

One more before he sends me back to the squid.

Out of curiousity, I wanted to double check and see if you can get a similar cutscene to Dumah's when entering Melchiah's chamber in the spectral realm, but alas there is none. Probably due to logistics in the mechanic of time slowing down to a standstill and they want to lock you in with Melchiah.

But that just further suggests that even though he can enter the spectral realm, doesnt mean he is actively aware of what happens in there. Similar to how Raziel interacts with the spectral and material realm.