Legion of the Damned don't have flames painted on their armor. They're warp fire. And they're intangible ghosts too.
They don't look like the spectres created by the Emperor in *Master of Mankind*, though.
For instance, *Fall of Cadia* doesn't mention them looking like the psychic fire there, which you would think it would have if that was the idea. In fact, there's a bit where one of the other Space Marines meets the gaze of one of them.
Maybe the flames on their armour are supposed to be Warp fire licking at their plate, but they're not made
As for Ferrus Manus, there's a big difference between the Emperor creating a Warp ghost of him (and who's to say doing so didn't "use up" Manus's soul like fuel?) while alive and suddenly doing it again on a semi-permanent basis after 10,000 years of slow braindeath.
Honestly, I thought I'd hate any version of Ferrus returning to 40k, but to my shock, I kinda love this one.
It suits Ferrus' role in the Heresy so well. The first Primarch to fall to fratricide, the first to spurn Horus' ill-fated bargain. He died fueled by hate, by outrage at the treachery of his closest brother - with all we know about the Warp and emotion, the concept of the Legion of the Damned as 'Imperial Demons' would tie in perfectly with an avatar of Ferrus' undying fury.
We know major conflicts effect the Warp, and not necessarily proportionately to their death toll - considering the event that caused the birth of Drachny'en, there's way more involved than just the practical considerations of said events. Ferrus' death in the Heresy is such a significant symbol, and symbology is everything in the Warp. Isstvan V saw the destruction of a dream generations in the making, it ended the Great Crusade, saw thousands murdered in a single moment of horrifying betrayal as the second wave Legions showed their true colours, and resulted in the death of a Primarch for his loyalty. The raw emotional turmoil of such an event could echo across the Warp for eternity.
A tortured fragment of Ferrus' soul, a revenant of utter spite bound to un-life by his connection to the Emperor and the aftershock of Isstvan V is something I'm totally on board with.