Pallid Horrors are (elite) wights that periodically appeared during the Scourge Invasions. They are Neutral, so lower level characters can continue to go about the city without worrying that a high level elite undead will rain destruction upon them.
The notable thing about them is that when slain, a Faint Necrotic Crystal will appear at the body for a short time. (It stays somewhat longer than the body.) This crystal starts the quests