(Please note, I haven't played KH1, 2, Dream Drop, or Birth by Sleep...just Chain and 358/2 days...however, I've watched a ton of Youtube videos from 2)
Chain of Memories does indeed kill Vexen, Lexaeus, Zexion, Marluxia, and Larxene. Ironically, only the last two were traitors, but Vexen was a failure and Zexion figured out why Axel killed Vexen, so he had to be eliminated...only Lexaeus was an unnecessary death in the Organization's eyes. Further, the dead Organization members have graves somewhere in The World That Never Was...not sure where for sure. I haven't seen any cutscenes where any of the dead Organization members are there in KH2...if anything, I'm expecting they're flashbacks. Zexion is seen in 358/2 days after he's dead, but Roxas was hallucinating. It gets confusing, since there's a Japanese version of KH2 with extra cutscenes...I do think everyone's alive in there too...and I know for sure those are flashbacks, so odds are that's what's happening there too.
And now, a bonus. This video shows Xehanort, Braig, Dilan, Even, and Ienzo, five of the six founding members of the Organization...before they were Nobodies. Why Xehanort is an old man in the first couple of scenes I have no idea...as far as I knew he was always like he was in the last couple of scenes...his father maybe? No clue.