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I don't have much experience with the PS1, besides a couple a games like Silent Hill, but both options might work just fine. The low res one will likely be faster due to not rendering extra pixels, but I don't think it will make much of a difference in speed due to the style being low in system requirements.

The atmosphere tends to be pretty big for me. Instead of being scary at a few moments due to jumpscares, a good horror game gives the sense that you're not safe and makes you feel unsettled the entire time while playing it. Horror is obviously more complex than that, but most of the good ones I've seen have a good atmosphere and a good presentation.

The tutorial, although you don't have to (if it lets you). Though, I would, because you'll be way less confused if you play the tutorial first.