The child of the Mother Ghost that Alexander encountered in the Land of the Dead, Ali was caught in the Land of the Living -- more specifically, in the Castle of the Crown. He had discovered many hidden passages in the castle and enjoyed playing in them, although he missed his mother terribly. When Alexander found the ghost crying in a cell in the castle basement, he gave the ghost the ghostly handkerchief that he had received. The ghost child knew instantly where to go to find his mother, and he took off with little more than a mention of the secret passages he enjoyed.
It is presumed, though not confirmed, that Ali successfully reunited with his mother and was able to join the Sea of Souls.