- Count Olaf is still alive. Sorry to break it down on you're heads like that, but I have some reasonably solid evidence as to why and how.
One: At the time of his death, Count Olaf had began to feel sorry for the Baudelaire Orphans. He knew they wanted him dead, and he knew Kit was going to die, so he faked his death to reassure both the children and his former love.
Two: If Olaf was strong enough to haul a heavy (and pregnant) Kit Snicket to shore, than he must have been strong enough to stay alive.
Three: Count Olaf took a bite of a horseradish apple, which eliminated the medusoid mycelium from his system, which means the only thing he had going in was the harpoon wound. As we all know, the harpoon first went through an entire diving helmet before entering his stomach. Given the size of the helmet, the size of the harpoon, and the amount of blood, the evidence shows that the harpoon could not have entered more than an inch into Olaf's flesh.
Four: Olaf would have allowed himself to be buried, then later escaped the crude grave. This is possible because the book states that the Baudelaires had barely even looked at his body or the grave when they were burying him.
Five: For around a year on the island where he "died," Count Olaf would have spent his time in the huge dump Ishmael had made, gathering supplies for a makeshift boat, staying well out of sight of the Baudelaire children, though (I suspect) sometimes visiting Kit's and his graves, and probably spying on Beatrice II (possibly his daughter). Then a little while after the Baudelaires had escaped, Olaf would have followed suit.
This theory had little problems, but one of them is that Olaf could have died anyway while adrift at sea.
I hope you enjoyed my theory!! I'd be happy to discuss it, and I want to know what you think.