I half suspect that Xykon really does know who Roy is, and just pretends to not recognize him because it pisses Roy off.
It depends. Illusion spells break down into a few different subcategories: glamours, figments, patterns, phantasms, and probably some more I’m forgetting. What we’re mostly interested in here are figments and phantasms.
Figments manipulate light and air to create sights and sounds. These sort of illusions are “real” in the sense that they composed of actual photons and sound waves - if you pointed a video camera at one, it would record it normally. These sorts of illusions affect undead just like they affect humans.
Phantasms, on the other hand, trick the target’s mind into thinking it’s perceiving something that’s not really there. Phantasms can be so convincing that the target takes actual damage from it, even though it’s essentially just a hallucination. These sorts of illusions are mind affecting effects, and don’t work on undead.
Do you mean an illusion of a pit where there’s really solid floor, or the illusion of a solid floor where there’s really a pit?
If it’s an illusion of a pit, and the illusion is of the “figment” type, then stepping into isn’t going to do anything to you. You’d perceive yourself as standing in mid-air, which is usually enough for you to overcome the illusion and see what’s really there. If you were blindfolded, you’d have no idea that anything odd had happened.
If it were a phantasmal pit, on the other hand, even if you were blindfolded, when you stepped “into” the pit, you would perceive yourself to be falling, followed by the perception that you’d just hit the ground.
If you meant the illusion of solid ground where there’s really a pit, then you fall in the hole, regardless of whether you’re blindfolded or not. That said, I’m not entirely sure how a phantasm of solid ground would work - usually, you’d use a figment for this type of effect. You wouldn’t just walk across thin air like Wile E. Coyote, but I suspect you’d perceive yourself to be standing on solid ground up until the point where you hit the real bottom of the real pit, and drive your ankle bones up into the top of your skull.
Der Trihs theory is entertaining, but strictly speaking, would be impossible. The easiest way to get the sort of effect he’s describing would be with the phantasmal killer spell, which does almost exactly what he’s talking about - but that wouldn’t work on an undead. Even if you did it with a figment, though, it wouldn’t work on Xykon because first you’d need to get the image of his worst enemy out of his mind, and undead are immune to spells that affect the mind.