Of course tofu can be sculpted. As any well-educated pirate knows, the Cannibals' of blood island (who also worship a lactose-intolerant vulcano)use large tofu blocks to make some pretty snazzy masks. You will need the auger (found on the small table in the Cannibals' Village) to make a mask out of a big block of tofu. Note: although not commonly known, a big block of tofu made into a mask can be easily stashed away in a pair of standard issue pirate pants.
source: CMI (aka Monkey Island 3) :-)