The graveyard you designated outside is the area bodies are moved before they get put into a coffin/tomb. I think it is anyway... you made it using the "p" command, right? If so then yeah I'm right... score a sexy point for me!
I like to consider it a area a body gets put get a quick cleanup and neatly put away. Rather then...
"Gosh, I'm lazy I'll drop it here in the sun let it rot a bit.. the next blockhead can cram em in the next box thats open."
As for the coffin you built, you have to use "q" to look at it and you have to allow burial using "b". Can't really assign it to an already dead dwarf...
Now that lil story bout yer butcher, I'd have to agree with what ya guessed... it sounds like ya trapped em good.
(~O.o)~