What do you do with dead villagers? I tried to move them, but its just sitting their decomposing. Any assistance would be greatly appreciated!

Until you obtain certain research levels you can't do anything with the bodies. Your villagers must obtain the knowledge first to deal with the bodies and then find where on the map to deal with them. It sounds like maybe you're missing the tech level you need. What do you have for tech research?

There is a full spoiler in another forum if you want a step by step play on what to do.