Nicoll is speaking in the context of the Gurdjieffian tradition, a.k.a. Fourth Way. "Mechanical being" is a technical term of that tradition and does not mean our physical embodiment. In his words:

Mechanical being is all that a man is, that is, his false personality (his imaginary I, which includes all qualities he attributes to himself, his many contradictory I's, attitudes), his personality, and his undeveloped essence. In other words, a man's being is characterised by multiplicity or lack of unity, lack of consciousness, lack of free will, lack of ability to do. This means that when life changes, circumstances change, at every event, our I's change and different ones surface; they take the centre stage and are unaware of the previous I or I's that were there; each I has its own desires and makes decisions accordingly; there is no control, no permanent Real I. In myself, I notice that my public face is friendly, helpful, cooperative, whereas my domestic face is argumentative, selfish, and small-minded. I am generally unaware of the transition and have little or no control over it. This is the state of my mechanical being. A person who changes rapidly between the I's, who is easily offended, or who easily beomes negative has a weak being.

Real being is that of a conscious man. He is characterised by unity, by the possession of one permanent Real I; he has the power to be different, he can do. However, in extreme conditions a mechanical person may experience a moment of Real I. For example, in times of prolonged stress, great fatigue, extreme danger or illness, a person's usual fears, or worrying what others think of him, or usual self-preoccupations, disappear, and his feeling of himself changes. However, for such a state to become permanent a man must work very hard and long on himself.

These paragraphs include other technical terms, which are hyperlinked at the linked site.

Translated into the terminology of the tradition of LessWrong, he is talking about NPCs and PCs. The purpose of the Fourth Way teachings is to show people their nature as NPCs, the existence of the PC nature, and a way to achieve that state.

I make no claims for the efficacy of their methods, I just happen to have some acquaintance with the books.