There's something here to please just about every fan of the genre, from point-and-click graphic adventures to first-person shooters to text-based Japanese "sound novels". The categories I've used are pretty arbitrary since many games have elements from several different designs and others are hard to describe. But that's one of the appeals of horror games if you ask me.
Most Overlooked IMO: Silverload, Juggernaut, Necronomicon, ...いる!, Overblood, Enigma, Mizzurna Falls, 夕闇通り探検隊 (or Season of Twilight, among other titles), Terracon, Yakata Nightmare Project, LSD, Echo Night 2
Note:I couldn't find a translation for most, if not all, of the Japanese games on this list, so I went ahead and translated the titles myself. I am not Japanese, but I have some understanding of the language. If there's something just stupidly wrong with a translation, you can leave a comment.
A genre that never left the shores of Japan, the sound novel can be described as a sort of visual Choose Your Own Adventure story set to the backdrop of various screens and songs. You progress through the story by reading the screens and making decisions along the way.
Point-and-click adventures go back at least as far as the NES, with the seminal game Uninvited. There are two basic forms of point-and-click games on this list: games like Clock Tower, in which you have 3rd-person control over a character in a 2D or 3D world; and games like Silverload, in which you play the game in 1st-person perspective and explore the environments screen-by-screen.
Basically, what I consider classic "survival horror." These are games where the focus is less on action and more on other elements, say for instance, puzzles, mood and atmosphere, or story.