I feel Realms Of The Haunting (ROTH), the game I bring up almost every time when we talk about forgotten classics, deserves a mention here
The game begins when you, Adam Randall, receive a letter and a parcel full of broken shards from your father who you haven't spoken to in years. He's the priest in a small town in Cornwall and following increasingly disturbing dreams, you go visit him. From there on, the story unravels...up to a scale you couldn't even begin to imagine.
The game is very ambitious, mixing FPS aspects with adventure and interactive movie stuff. More important is the atmosphere tho, which is frankly some of the best ever. It's not a horror game in the 'messy' sense...decapitated rats are probably some of the goriest stuff you'll see. But the psychological horror is INTENSE. It's helped by religious, cosmological, esoteric and apocalyptic references throughout the game. And literary references like Poe's The Pit and the Pendulum, Longellow's poem The Reaper* and so forth.
In addition to all this there's a wonderful inventory system with 3D representations of every item and the ability to have Adam reflect/comment on every item and/or situation and person he meets (the inventory also 'holds' concepts, places and persons).
Seriously. You need to play this game.

Get it somewhere. Even the FMV is pretty darn decent! Oh and you can 'read' diaries, maps and notes in your inventory, which are all neat and handwritten.
The first part of the intro only really starts to make sense halfway the game, so don't worry if it's a little weird.
http://www.youtube.com/watch?v=3idejBykJQg
Blurb from Home of the Underdogs:
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 | Quote: Realms of the Haunting is one of the best, if not THE best, occult games ever, featuring an outstanding, well-told story that evolves from the haunted-house cliche to a fascinating interplay of good and evil, with many plot twists. The game, powered by the improved version of 3D engine used in Normality, is a mix of action and adventure that, for once, truly appeal to fans of both camps. Puzzles are logical despite frustrating hunt-the-pixel annoyances, and the acting is above average. Horror fan or not, you won't be disappointed with this 4-CD epic. Highly recommended. |  |
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Screenies
*There is a Reaper, whose name is Death,
And, with his sickle keen,
He reaps the bearded grain at a breath,
And the flowers that grow between.