I didn't read all of your last post, sorry, anyway, horror, while its not my place to say because what your client wants (unless you have a larger client base than what your suggesting) is what your client gets. Horror is very simple in my mind, and way over done. My bias aside, dim the lights so your mostly in darkness, make everything as filthy as possible, and if possible make it so things look they are falling apart (things littered around, trash, broken handels on doors etc.), lastly, the blood thing is correct, lots and lots of blood.

On a final note, I love your level, but if your going for horror, your going all wrong, need to make it so the dead would feel right at home.