one of my players, an undead lord of 4th level, decided to create a 2 HD bloody skeleton out of a 5HD creature.
Is it possible to lower the HD of a creature as your animating an undead so it can fit within the parameters of HD requirements?
If you can do this, can you list the source where I can find the rules for this?
Only racial HD are counted when using animate dead and figuring out skeleton & zombie stats. So a Level 5 Human Fighter only counts as a 1HD skeleton because skeletons lose all hit dice from classes, and humans do not normally have racial hit dice. So a human bloody skeleton would count as 2HD worth of undead per the Animate Dead spell, due to the "bloody skeleton" template wording in that spell.
Racial HD are *always* counted when doing Animate Dead. If the creature you want to animate had 6 racial hit dice, two of those hit dice don't just disappear because you can only create 4 HD worth of undead. If you can't make enough HD worth of undead to animate a creature, then you simply cannot animate that creature. You don't get to ignore some of its hit dice just because it isn't convenient.
That was my thought as well.
Can anyone contradict this?
No, because that's how it is.
Looks right. No animating a titan skeleton at 5th level.