Hi. I had a lot of fun playing NH Remake when it came out and I've been eagerly waiting NH2 ever since, I just LOVE this kind of horror games/mods, really nice job guys! Now, one thing I don't like in this sort of games is the use of monsters (kinda stupid, you might say ), but so it is. It just doesn't feel scary seeing a zombie coming toward you and trying to kill you, especially if you've seen the zombie before. My suggestion to you is to use as few monsters as possible.
A perfect horror game would be one where you have to deal with only one monster/ghost/whatever, but you don't actually see it, only maybe a little bit when it comes to attack you. The only way it can attack you is when you're not being careful enough, like running into a room or something instead of walking. The fact that you don't know what it actually is is what's really scary. The same thing is with dark rooms(in real life), you're not scared because there might be a ghost/whatever you're afraid of, you're scared because you don't know what there is until you turn on the light.