Hi! Yes, there's the literal meaning you mention, but I was indeed dragging in the conceptual because this discussion involved three rabbis and a couple of hours and we hit the figurative heights with it. You've encapsulated it extremely well! A being in God's image has agency, power, means of reasoning, and choice. A zombie just has... drive for nomnoms. (I do have an excellent plushie zombie at work. His name is Throckmorton and the religious school kids like to rip his velcro brain out.)

Neshome is Yiddish for soul, yes. Hebrew would be nefesh.
Edited because you're a UU so I will freely spell out God, since attenuating a word in English is a piece of frumheyt I will abide by for the comfort of others -- who the hell am I to tell you what to spell out about your deity -- but do not hold to myself.