"No estaba muerto, sino de fiesta."
Traducción:No era mort, sinó de festa.
I wouldn't try too hard to figure out many of the sentences in this course. There are a lot of them which make only grammatical sense. Anyway, I guess you are right. This one could be interpreted, IMO, as if the guy were like dead after too much boozing. In English, I'd say “He wasn't dead but partying (or having a ball)”. You can check out the new Spanish sport, the botellón (or, as some Catalan pundits insist we call it, entrompada).