Yeah, though I just started playing WoW recently, I haven't gotten that lost into it. Although I do run my nightelf around naked everywhere. And man do I die a lot.
I play WoW and have never seen any of that stuff. I think the nude stuff is just a hack of some kind where you can change the underwear of your character to be the same as your skin colour. But yeah. There are some pretty weird people out there for sure. ESPECIALLY on RP servers.