Using number 13 of the alternative level drain options posted on the Dragonsfoot Forums. http://www.dragonsfoot.org/forums/viewtopic.php&t=43722
Actual Rule at Table:
Creatures successfully attacked by a level draining undead/spell caster suffer a cumulative -1/-5% penalty per level drained. This applies to all checks; attack, saving throw, skill checks, Thief abilities, attribute checks (including System Shock/Open Stuck Doors), et al. It also imparts a level reduction in spell casting skills/Turning power.
Example: A 7th level Magic-User hit three times by a wraith can still cast fireball (and can even learn it), but casts it with the caster level equivalent of a 4th level Magic-User; range of 14“ and inflicts 4d6 damage, rather than range 17” & 7d6 damage.
Natural healing is at half rate as well as regeneration. Curative spells/powers cure at the absolute minimum effect and duration.
Any character that dies (any cause) while under the curse will arise as an appropriate type undead under the control of the creature that last drained. If the controling undead is a Spectre or Vampire and is slain, the character can roll a final system shock check (with appropriate penalties from the curse) to see if they regain their free will (or at GM's descretion). Lower order forms of undead are always not free willed.
The curse may be removed by a Remove Curse spell from a caster level equivalent to the HD of the last drained undead/spell caster (A 10th level Magic-User's curse can be lifted by a caster greater than level 10). A limited wish, alter reality or wish spell can always remove the curse.
Raw Post From Source:
Touch causes the Curse of the Damned.
The afflicted creatures suffers a cumulative -1 penalty on all “to hit” & saving throw rolls or -5% skills (per “level” drained). Spells are cast as if the character was this many levels lower (EX: a L7 Magic-User that has been struck by a wraith 3 times casts fireball to a maximum range of 14“ and inflicts only 4d6 damage, rather than range 17” & 7d6 damage).
Healing or Regeneration of any kind is at half rate or minimal effect while suffering the curse. Thus, a cure light wounds would restore but 1 HP, a troll would only regenerate 3 HP every 2 rounds, etc.
Any character that dies (any cause) while under the curse of the damned will arise as an undead after 3 nights under the control of the undead that last drained the character. The curse may be removed by a remove curse spell, provided the caster's level is greater than the HD of the undead that inflicted the curse (ie: greater than L5 in the wraith's case). A limited wish, alter reality or wish spell can always remove the curse.