Hmm, I didn't know that could happen. I'm pretty sure that's not the case though. I took their capitol and killed their pretender after conquering all their territory, so none of their troops were left to 'fade away'. Unless they had a stealthy empoisoner somewhere who had taken his death-magic vitamins... actually, I remember now that Foul Air was cast on the same turn that I eliminated them. They had only the one province at the time; it couldn't have been cast from anywhere else, and all their troops were killed in the Last battle.
Anyway, it's not a big deal, I was just wondering if this was a known bug. I tried searching and found a 27-page post on bugs that I didn't feel like reading through...
cheers...