I do understand, and having made a visual novel hybrid myself in the past, I do know the work involved in crafting a story. I think the perfect place to start with that could be in the mortuary, especially with the description you have in that scene already. Psychological horror is based on how our minds interpret the environment, so playing with sound when the screen is pure black, or playing with light/shadows once the player can see the environment, might be a good way to go because it's a visual novel. Darkness is where anything can happen and where our fears and imaginations really run away from us, so with the mortuary in particular, I feel like you already have a good base to work with.
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The advice is very appreciated! To be fair we were aware how lacking it was in portraying the horror aspects especially in the environment. I also did wish to focus more on the mortuary in-game but time constraints had us cut off some parts. But we only have time from here so we'll be sure to apply this however we can :3