In the Midrashim I noticed that Rabbanim keep mentioning events in which the Rabbi would be walking along and come across a man doing some task and it would turn out to be the spirit of a dead man who did not make it into Paradise.
Did the ancient Rabbanim believe that the spirit of the dead still walked the earth or did they believe that after death one immediately went to either paradise or punishment?
Here is an example of one of these stories:
Rabbi Akiva once met on a journey a remarkably ugly man toiling along under a great load of wood. Rabbi Akiva said unto him, "I adjure thee to tell me whether thou art a man or a demon." "Rabbi," said he, "I was once a man, and it is now some time since I left the world. Day after day I have to carry a load like this, under which I am obliged to bow down, and submit three times a day to be burned," Then Rabbi Akiva asked him, "What was the reason of this punishment?" and the reply was, "I committed an immorality on the Day of Atonement." The Rabbi asked him if he knew of anything by which he might obtain for him a remission of his punishment.