Are the robots we create alive?
You just can't "simulate" something before it has been made. You just can't, it makes no sense, it's like saying "I predict that in 1929, the US stock market will crash" right now. It's poor English at best. To simulate is to take something real, and make a virtual representation of it. In your example, they did just the opposite: they took something virtual and made a real representation of it.
I don't quite understand your last two paragraphs. Are you saying that although Gilgalad has a physical presence as a pattern of electrical signals, it is somehow incorporeal in nature?