Added to Homebrews.
Maybe relentless should be Ex, but either way I like it.
The underbar is nice. We can point DMs with Monsters of Faerun to the crawling claw for the hands.
Why have you given the first Walking Dead a +6 Reflex save?
I make it a +0 Ref (poor save for Undead, +1 for 4HD, -1 for Dex 8).
The +2 Fort is one too much as well (poor save, +1 for 4HD, no ability adj.).
I'm thinking the Challenge Rating may prove a little tricky since a Walking Dead's CR should presumably incorporate the challenge level of both its deteriorating stages.
That makes sense, assuming a crawling torso.
I don't see any need to lower the Str based on the sized change, either, as the remaining part of the upper body hasn't changed size. Its bite is as big as it always was.
Updated. I added some additional flavor text to explain the various stages (and the size change).
Looks good, except it shouldn't have "Even though its bite is a seconary [sic] attack," in the Powerful Bite.
Is it worth adding "walking dead cannot speak" to the description?