Re: the lighting.

If the setting was some kind of building (asylum, cellar of a big-bum hospital, military bunker, whatever) that had lighting, you could have the lights randomly flicker on and off, by turns either lighting the whole complex or hiding it in darkness. And for extra lulz, either provide the player with no lighting of his own, or very limited lighting – like a flashlight with limited batteries or something.

What I had in mind here was kind of Riget (Riket?) a la Lars von Trier. I think Stephen King made a ****ty derivative work on it called Kingdom Hospital, but I hear that’s not so good. Basically a ****ed up, psychedelic hospital where everyone is going quietly (or not so quietly) insane, the staff have a wierd secret society, and there are satanists in the basement. Half of the time you (the viewer) don’t know whether to laugh or hide under the sofa, gibbering. In that way, it’s not just the character who is insane, but everyone else, and possibly even the building itself. To take that further, you could have a list on which you roll every 100 or 1000 ticks, with things like: nothing happens, level changes, spawn monster, lights go out, etc etc.

Oh, and when you take drugs, things go back to normal, meaning the weird changes etc stop Log in to see images!.

In any case, my suggestions would be to use either a contemporary or contemporary fantasy world if you want the horror aspect. At least for me, medieval generic fantasy is not particularly scary, even with tentacle-enjoy (no wait, was that a good thing?).