((I can't understand why one would be unable to distinguish between imagination and reality. Imagination and dreams are even more imperfect and fragmented then memories or reality. It requires conscious effort to maintain them in the case of daydreams or remember them in the case of dreams. And I feel things in my dreams. I can imagine the taste and smell and texture of a perfectly cooked piece of bacon and make my mouth water. I don't see why there would be a problem.))
Here's the thing. And I think this is the crux of my argument, so if you don't mind, I will pick your statement apart.
"Imagination and dreams are even more imperfect and fragmented then memories or reality." Yes, but why are they more imperfect? And even if something is imperfect and fragmented, it can be hard to know it's just your imagination at the time of the said imagination. More on that later.
Seeing two different things can be a bit of a giveaway. Unless you close your eyes and ears. Or are somehow so detached from reality that you completely ignore your senses. But you can hardly blame a robot body for that. It's more of a character trait.
"It requires conscious effort to maintain them in the case of daydreams" Once again, why does it take conscious effort to maintain them? Because you have stuff to do. Because you feel hunger, or smell something, even if you are not aware of it. Because it's warm or cold, or your ass is hot from sitting in a chair, or because from the sun's position in the sky (or artificial lights) you know it's still day. All these things help you separate the two things. You also know it's a daydream because you've slept the night before and it isn't time to sleep yet.
Now take all of that away. And it no longer takes any effort to maintain them, they come and go as the please. You could make an argument that a workaholic would be able to avoid that because he's always got stuff to do, but I'm just going to ignore that for now. Or perhaps being a workaholic could be a viable solution to the problem. Pity that HMRC are not that.
Once again, robot bodies have other senses. Sight, sound and probably touch (to avoid things like loss of reflexes or accidentally crushing a bottle). And even in robot bodies people need to sleep and sleep well, otherwise they'll begin suffering from all the things associated with sleep deprivation. Our brains need sleep as much as our bodies, if not more.
"or remember them in the case of dreams." Once again, why? Why is it so hard to remember dreams? Skipping all the physiological reasons for why you don't remember dreams, you don't remember dreams because your body knows it is a dream. And what if dreaming and waking is identical to your senses?
You don't remember dreams because they're an artifact of the data processing that happens during sleep, they're fragments of fake temporary memory-like things that last for a few seconds as your brain tries to optimize your memory. If you access those memory-like fragments before they are forgotten, then your brain fills in the gaps, since that's its job. However they are still not real memories. You have not experienced them, you have not "felt" them, so they do not bear the markers of real memories. Why do you have to wake someone right after REM sleep to have the best chances of them remembering the dream? Because normally the brain will scrub the dream from temporary memory before it has a chance to become permanent, because it knows it's not real.
"And I feel things in my dreams. I can imagine the taste and smell and texture of a perfectly cooked piece of bacon and make my mouth water." Yes, you can feel it with your senses while you are dreaming. And then you stop dreaming, and feel things with your senses in the real world. And there is a transition, an unskippable transition between your dream and you waking up. If you ever dreamt of yourself in your room, you might even have had a dream inside a dream, but you won't confuse it with you actually waking up (at least after a few minutes of being awake). With the robot body, you don't have that transition, so you won't really know when you have stopped dreaming and woke up.
No, my brain, my memory, tells me that I have experienced something. I can't confuse dreams with something else because dreams are something to be remembered, not something that is experienced. Unless someone wakes up while having a dream, where you have things like nightmares. But even then, the disconnect between your experiences inside the dream and the ones right after you wake up should be enough to convince you.
The real horror is when you don't feel anything in the real world. Or, after a while, in a dream.
I don't see why that's a horror. The only things you're missing 100% is smell and taste. I know from a friend who has lost those senses that that's not that terrible. Irritating, yes. You miss a lot of things, yes. But it's not that terrible. Humans, after all, don't use those senses too much. Humans go primarily by sight, unlike, say, dogs that go by smell. The lack of things like breathing or feelings in your internal organs might have some effect, but if so, I would not not what kind of effect. Such a thing has never existed in history to my knowledge without some underlying, often deadly neurological condition. I believe that I would have no problem with it, but that's just my assumption.
[An interesting derail, but of course your robot body has receptors which you feel. So when I say that you don't feel it is not entirely true. However, since those are not natural to your body and don't work the same way, it is questionable if they are able to replace it or fulfill even remotely the same roles.]
This is one of the reasons that our arguments don't have much weight other than simple philosophical musings. Nobody has done something like that before and we lack the scientific understanding about the human body and the robot bodies to fully confirm or deny anything. So anything we say is just our opinions and assumptions backed up by logic with not much practical application. Not that this isn't an interesting exchange.
But also besides that, your body knows that it is a dream because you go to bed when you are tired and you wake up when you are not. There are physical and psychological reasons for you to dream, and these physical reasons are an integral part of maintaining a normal (or abnormal) sleep cycle. Take those away, and you rely only on you brain to tell you that it's tired, but without the hundreds of ways for it to express that. (The way your body tells you it's time to go to sleep.) And even if you can reason away what is a dream and what is not, your unconscious might not be able to. I wouldn't be surprised if the logical consequence was you being able to remember dreams as if they were real.
Once again, this falls under the category of how robot bodies work. The brain isn't an isolated system. It needs feedback, both in the form of neurosignals and in the form of chemicals. If the creators of the bodies haven't taken care to take care of those "outside" signals, it could lead to many problems, the least of which is sleep. If they have taken care of them then we need to wonder if they also took care of the sleep and timing problems.
One of the prime things that tell us how to maintain a steady sleep cycle is our circadian clock that is mainly influenced by the light/dark cycle. Sure, people can easily break that programming, but that's not that healthy. With a steady light/dark cycle our circadian clocks are able to sync up and help tell us if it's time to sleep or not. If the Sword doesn't maintain that cycle or people don't take care to set up that cycle on their own (a time they eat, a time they sleep, a time they wake, a time they work out, etc), then they're going to have problems, whether they're in a robot body or in a human one. A human needs to have a cycle, a routine.
Once again, dreams are not meant to be remembered. They are artifacts, garbage data, nothing more. Not remembering has to do with the way they are created and stored temporarily in the brain, not any conscious or subconscious thinking on our part. Although I guess someone could convince themselves to remember a dream or even have a certain dream, but that would require conscious or unconscious effort on their part, the first of which indicates knowledge, the second psychological problems unrelated (or at least not directly related) to the robot body.
Now, let's get back to this: "Imagination and dreams are even more imperfect and fragmented then memories or reality." That is true, but the real question is if it matters. Having an imperfect dream does not stop you from believing in it at the time of the dream. (Even if you don't, that can change based on the stuff below:) When we view our memories, we add and remove and rearrange them as we see fit. That's not a secret, it is a well-known fact. Now if take all the things I have said before, the body no longer having any indication of what is a dream and what is not. The lack of transitions, the lack of physical indicators. The brain treating dreams as reality.
Again, I will give the argument that dreams are not meant to be remembered because they aren't real experiences. They are memory-like fragments. If you keep thinking about them long enough and vividly enough for them to be imprinted into long term memory and you add to them and change them and obsess over them while also removing the "this was a dream" tag from them, then yes, you'll get that. But that is true for any human, robot body or no robot body. The robot body MIGHT make that a tad more likely to happen, but without underlying problems, you won't get that.
You end up having dreams that are indistinguishable from reality, lack a regular cycle, have no transitions between entering and exiting them, and whenever you remember them, your brain will do it's best to add and fill in all the details. It is here that the whole thing about being mentally unstable comes into play the most. And I do not know to what extend it will happen, and it is quite possible that how it happens will depend on the state of your health. But I hope you will now at least understand why I keep saying that it may be impossible to distinguish between the two.
I will concede that it might get a bit harder to differentiate. And that this may lead to trouble if combined with other problems that man may have. But it won't be impossible, at least not for a normal, psychologically healthy human. Then again, with the tings that happen during stasis, that kind of human may be hard to come by on the sword. Event Horizon anybody?