Purgatory is a spiritual realm, but the island is physical.
I'm of the opinion, at least for now, that the souls on the island merely can't escape the Snow Globe in the same way a living being can't escape it.
That makes the island a bad place to die in that your soul can't leave, but that is something altogether different than purgatory.
Another point is that as Michael stated, the souls are those who died on the island and haven't been able to leave, and so it's certainly not purgatory in the sense that just any wayward soul can go there. Your body still has to have been brought to the island.
But Isabella you say? How did she appear to Richard? Well that's easy!!!! Actually I have no idea, maybe you can help on that one. :-)