I used to support Capita SIMS in schools not so long ago. There's just one database that can be viewed in various ways depending on which menu option the user is accessing. There is a deceased flag on each pupil record and a reporting module for generating letters, attendance reports etc accesses the database based on choices made by the user (which class/year group, report type etc).
If a member of admin staff has been asked to generate attendance letters for a class/year group etc and the deceased flag has NOT been set on the pupil account, then the report will be generated for this pupil along with the others.
The head should have spotted the name for a deceased pupil among the letters, but if they had tens or hundreds of letters to sign chances are that they were just focussing on the bottom of the letter to write their signature.
The way I see it this is down to human error because; a) someone forgot to flag the pupil as deceased and b) the head and/or whoever printed the letters and put them into envelopes failed to spot the fact that the parents of the deceased child were being written to.