I've played some very convincing jokes on my friends in the past, but you can't beat the twisted mind of the care home nurse.
Seriously, isn't this the trick played on juniors at mortuarys? Something to do with bodies releasing trapped gases from the lungs long after death. Sometimes the 'breath' is exhaled with such force that the vocal chords resonate, causing moans. Creepy.
Presumably the 'cloud' was a result of condensation due to low room temperature (bodies would be kept in low temperatures to slow decomposition). Air turbulance could be attributed to the vapour twirling, with a sprinkling of added drama to make the story worth telling.
Yep, it would make the hairs on my neck stand on end too.