Yes, you can play a squib (eg Argus Filch). Yes to centaurs (eg Firenze). Nearly Headless Nick is a played character... In short, as long as there are RP opportunities then yes, they can be played.
No to muggles, though. I guess if the situation called for it a muggle could be NPCed in rare circumstances, but not actual muggle characters.
Hope that helps!
