Yeah they could have had the guy who gives Link the sword for example already be in the cave, but some artist spent time making the white cloud animation - that's why I think there is some significance. It's almost like he's a spirit who only shows up when someone's watching.
For the Demon King Costume Packs that sounds like either some glitch occurred and they didn't realize you already downloaded it, or they forgot to differentiate the two packs.
What are your theories on why both allies and enemies in Zelda 1 spawn in white clouds (of various roundness)?
When you defeat an enemy in Wind Waker, it explodes in a purple/black cloud. Around 2003 my friend watching me play exclaimed "it's the energy going back to Ganon!" I'm not sure if...