Titles are not my Strong Point

I was cruising TV Tropes pages to block out the siren call of WoW when I came across a Half Life Mod called Afraid of Monsters. Mildly interested I downloaded it and gave it a go.
It had all the traditional horror game elements: abandoned hospital, lack of adequate lighting, weak-ass melee weapon, limited ammunition which forces you to use the aforementioned melee weapon.
A lot of horror games like to start off with no enemies but keep giving you items so you are in a constant state of readiness nervousness; AoM looked at this idea and ran with it. For about twenty freaking minutes! If that wasn't bad enough, just before the zombies started kicking the crap out of me I had to pull a switch turning off the power. After 15 seconds of standing in pitch black darkness (instead of near pitch black darkness) I realised I'd done something wrong. Checking Youtube I found out that I had missed the flashlight; it was several floors away, in a random room, in the dark (even before I pulled the switch). How the hell was I supposed to have found that to begin with? It looked like just another piece of irrelevant scenery. That was the second last straw, the last being the freaking zombies. So I gave up on what was essentially Doom 3 on the Half Life 1 engine.
I personally enjoy the concept of horror in games. Just the concept. Games that actually try to apply this fail in my eyes, as they either just aren't that scary, or they cheat. When I say a game (or really any form of media) cheats to create horror and suspense what I mean is that the media in question uses rather cheap tactics for an equally cheap scary, such as:
-have something jumping right at your face suddenly, especially in a first person shooter,
-making everywhere so fucking dark,
-making everywhere so fucking dark (this is important enough to be said twice),
-using the game's difficulty as a means of scaring the player.
Because I've spent far too much time thinking about horror and why no one ever seems to get it just right I could go on for pages and pages so I'll just talk about one point that was present in Afraid of Monsters (and many other games i.e. Resident Evil, Silent Hill): high difficulty to create fear.
Now difficulty is important to creating atmosphere and tension. If you aren't being properly threatened then it doesn't matter if you are fighting eldritch abominations from the abyss because you can just curbstomp them and be on your way (perfect example: Ravenholm from Half Life 2; once you realise the zombies aren't that dangerous suddenly the whole area losses its intimidating atmosphere).

Obligatory picture. Apparently this is Shub-Niggurath

Raising the difficulty fixes this to an extent. Raise it further however and you get a worse problem; once the game gets too challenging the fear gets moved from the flesh eating monsters and to the game over screen. If you are on edge because one mistake and you lose all progress since the last save then the game isn't really scary, it's just punishingly hard.
The only thing worse than fake fear being created from difficulty is if the difficulty itself is also fake. All games have some fake difficulty in the sense that the first play through is harder because you don't know all tricks and tactics. What's bad form is when this prior knowledge of the game is almost vital to successful completion.
I could go on, but given the length already I think I'll end abruptly.