The Nightmare Mudlib is a set of LPC programming language frameworks created by George Reese for building multi-user role playing games using the MudOSLPMud driver. When people refer to the Nightmare Mudlib, they may be referencing any one of three incarnations:
Nightmare 3 (in reality, Nightmare 1.x, 2.x, and 3.x)
Nightmare 3 and Dead Souls were released under Open Source licenses. Technically, Nightmare 3 was released under a pre-Open Source open source license. In other words, it predates the concept of open source but was available for use and modification free of charge consistent with modern Open Source principles. Dead Souls was placed into the public domain and thus is not encumbered by any licensing.
Nightmare IV, while released under a proprietary license and subsequently withdrawn from distribution, is largely similar to the public domain Dead Souls Mudlib. Dead Souls lacks only the world from Nightmare LPMud and world documentation.