In B/X, as opposed to Labyrinth Lord, a dwarf’s attack bonus increases by +2 for every 3 levels of increase. A 7th level character hits AC 0 with a 15; a 6th level character hits AC 0 with a 17. In White Plume Mountain specifically, no monster has an AC better than -1. With his 16 strength and +2 axe, his chance of hitting AC -1 went from 9 in 20 (45%) to 7 in 20 (35%)…in relative terms, a decrease of 22.2% effectiveness, and that is the greatest RELATIVE decrease he’ll face, in this particular adventure.
However, both of these "AC -1" monsters have been avoided at this point (one was the sphinx), and a simple bless spell will increase his THAC0 to a 9 in 20, being only a relative reduction of 10%. To me, this isn’t a gross reduction in abilities…Borgnine should be okay. In addition, his other “dwarfy abilities” (infravision, trap detection, bonus languages, etc.) are completely un-diminished.
Sly the thief, on the other hand, had NO reduction in combat abilities: a 5th level thief has the same attack rank and saving throws as a 7th level thief. He lost somewhere between 15-20% on most of his abilities, but again, many skills were unaffected (backstabbing, reading languages, his ability to wear leather armor, his ability to use all weapons, climbing only down 2%). Again, I don’t see this as big a deal as you.
But your main beef seems to be the way the energy drain was encountered in this particular adventure (White Plume Mountain). Let me address your issues:
1. Rolling for wandering monsters while characters were asleep: the dungeon has wandering monsters; your party was already aware of this. Sleeping in a dungeon means checking for wandering monsters many times (once per turn, though in WPM the chance of wandering encounters is low: only 1 in 12). When a wandering monster appeared, I had your single guard (Sly) roll for surprise. He failed. I interpreted this as “falling asleep on the job,” but mechanically I did nothing more than would have occurred had everyone been awake and been surprised (i.e. the wights each got one free attack, they made attack rolls, then the party rolled initiative, then they attacked again (having won initiative), then the party got to attack and the clerics “did their thing”). The "falling asleep" was just color, not an arbitrary “screw you.”
2. Regarding wights being wandering monsters at all: wights are 3HD creatures and are considered an appropriate challenge for parties averaging at least 3rd level. Wandering monsters tend to be of equivalent or lesser level than the rest of the adventure, and these wights are fairly pansy compared to other monsters. Part of this has to do with wights being weaker in B/X than they are in AD&D (in AD&D they’d have 4+3 hit dice and thus hit MORE often). However, they have been standard "level 3" wandering monsters since the Little Brown Books of OD&D (with the same stats as the B/X monster) and neither B/X nor OD&D have restoration on the spell list.
3. Regarding "Restoration in AD&D:" Restoration is a 7th level cleric spell, not 6th, and is only available to clerics of 16th level or higher with an 18 wisdom. Even though S2 is an AD&D module, this would not be a spell readily available to characters in a levels 5-10 module (certainly not for characters of 3rd level for whom wights are a standard challenge). IF available for sale, the DMG recommends a price of 10,000 + "a like amount per level of experience of the recipient." Since the spell only raises the life level of a character by ONE per casting...that would be 70,000gp to restore Borgnine and 130,000gp for Sly. A 7th level dwarf fighter in AD&D only has 70K-125K in XP and a larger percentage of this is from monsters than gold (as opposed to B/X where monsters are worth less in XP)...consequently, Borgnine would have probably BANKRUPTED himself to increase his level one step. The thief would not have been able to afford restoration to full level.
This seems to be quite a sticking point, Luke, which is why I bother to address it. I know that tallying XP is all part of the fun (that is, when I ever bothered awarding any), and I know that getting ‘em ripped away seems like a bummer. Rest assured that if this were something other than a one-off adventure, I’d be sure to provide means of “restoring” the party members (I’m not THAT big a jerk…well, not usually). On the other hand, “shit happens” in D&D…sometimes, despite all precautions, an arbitrary roll or two can really throw a wrench in your happy world…and when that happens, you just have to roll with it. It’s the nature of the game.
I promise: I really will try to be less gleeful if such a fate befalls YOUR character.