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And no I don’t mean in the sense that he was a person before hand. (Please note this info is from memory as the site is down)
First off, the Restoration Team of Welcome Home talks about how they are finding pictures and old paraphernalia from the show. They talk about old scripts and show parts of books, but at no point do they talk about having the actual puppets. Yet Wally is seen as present.
Both in his drawings in the guest book as well as some other messages, it is shown that Wally is active and aware of the site.
Going back to the Restoration Team, hidden in the Q&A section there are hidden messages about needing to get it out and that it hurts both alluding to something in the Team leader’s head.
In order to supposedly get whatever is hurting the Team leader out of his head he started the website and the restoration project. And what if he did? What if it was Wally in his head that he had to get out and in doing so put him into the website? Maybe not fully or maybe letting Wally interact at least keeps him quiet, but most of the signs of Wally being around seem more like they come from inside the website than anything. Especially if they do not have his puppet, it makes me wonder what Wally is.
I know that Clown has made a few post talking about Welcome Home more relating to gaining a concise and awareness, so I know that the thought is mainly a puppet gaining sentience, but is he just a puppet?
Most of this is just speculation and such but I still think it should be consider that Wally may not be confined to his puppet body.