In terms of how the WC is funded, well we know that their Special ops team deal with smuggling etc. Considering their 'end justify the means' mantra, it's possible that they fund themselves by means of criminal activity.
As for vampire metaphysics, I'm not entirely certain, however, one must remember they are often referred to as 'undead' because they share some qualities of their former species however some of the biological processes are no longer active. Vampires do have some sort of mystical bloodflow as they do bleed and of course they can still perform motor functions, often better than humans. So this is why they are called undead. They are not completely dead as they would literally be corpses. Clearly getting an erection is a left over physiological function from their former species.
Well, as Adam said, the vampire is a paradox, half demon half vampire but belongs in neither world
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I'm gonna use this quote from The Gift to explain the blood thing:
From what I understand, the drinkig of the blood makes the vampire... move. move its body. If they don't drink blood, their body wouldn't be "working". I'm not sure how to explain it. It's like, the human, in order to live, needs to eat and drink. It makes the body live. The blood system, all systems in human's body. In vampires, the blood they drink flows, so that actives the body. Did explain it clearly enough?
Well, at some point doesn't Spike say something like "You know what happens when we don't eat? Bloody walking corpse!" or something. So, this would also reinforce the idea that drinking the blood keeps them physically moving.
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I'm gonna use this quote from The Gift to explain the blood thing:
From what I understand, the drinkig of the blood makes the vampire... move. move its body. If they don't drink blood, their body wouldn't be "working". I'm not sure how to explain it. It's like, the human, in order to live, needs to eat and drink. It makes the body live. The blood system, all systems in human's body. In vampires, the blood they drink flows, so that actives the body. Did explain it clearly enough?
Yes. My take on this is when the vampires feed, they don't actually digest the blood, rather they absorb it into thier own blood stream. So, if a vampire is kept from feeding, he becomes ill, tired, and pale. (like the condition Angel was in when Wes rescued him from the ocean after Conner sunk him). The vampire is a dead corpse, re-animated by a demon. Basically, the demon is "taking" over the human body, walking it, talking it, living in it. It's a form of possession. Digeston is bypassed, so "body proceess" does not come into consiteration. The body will not function without the blood.
Hope this wasn't redundant.
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I think the thing is, they don't have to breathe, but they can breathe. They can inhale and exhale, there is air.
It's kind of like a adaptation technique, maybe? They could be said to breathe to look more normal and to fit in with with humans. The same goes for eating. Vampires do not have to eat, but they still have the ability to taste (another left over human thing) and so this is why Spike likes those onion things and Angel can't drink coffee. It's also a personality thing. The solid food does not nurish them, so it's pointless, but they eat someones anyway for fun.
It's all about what they can do, not what they need to do, like Urgent Power said.
Spike drinks heavily, as an example. Spike can get drunk, like a human, but his body does not react in the same way to it. It's not like he can get alcohol poisioning and die lol he's already dead.