|Nothing says 'nightmare' quite like serrated machete hands.
THE MIDNIGHT SEA, and CREATURES OF NIGHTMARE
The Midnight Sea is the name wizards and prophets give to that dark, roiling realm of liquid nightmare which exists adjacent to, and underneath, the world of the Wampus Country. It is a dark mirror, a horrible place from which fear itself may be spawned. Luckily for Wampusites, contact between the two worlds is rare - usually the product of the deliberate act of a deranged sorceror or ecstatic zealot. On occasion, however, nightmares leak through into our world all on their own.
Each thinking mind within the Wampus Country is a potential pinhole in the curtain between worlds; given the right conditions, a smattering of fear-stuff can leak through and coalesce into a creature. The best known, and most innocuous, of these invasions is the creation of a Moop by a child's particularly vivid nightmare. Moops, of course, are furry and cute up until the point they bite your face off, but chiefly they lurk in closets or under beds, continuing to feed on fear until such time as they dissolve from inconvenient exposure to sunlight, or are discovered by a vigilant parent and maimed with a shovel. Experts suggest that Moops are themselves relatively weak as nightmares, since they come from the bad dreams of relatively normal, happy children - who lack the worldliness to understand true terror, have perhaps never lost a loved one, and do not have decades of personal failure stoppered up in their hearts like so much corrupting bile, waiting to burst forth and take corporeal form.
Adults, especially those in the depths of despair, provide the more lucrative nightmares, and those most likely to take physical form. Most of these creatures, once spawned, act purely on destructive impulse. They may immediately kill the host who spawned them, or may act out residual desires of that host (murdering a rival or a lover, for example). Usually the nightmare-beasts do not survive the dawn and are melted away by the sun's rays. But a very few - thankfully, a small number indeed - are somehow immune to the cleansing nature of morning light, and their rampages do not end so easily...
GENERATING A NIGHTMARE-BEAST of the MIDNIGHT SEA
Step 1) Start with the stats of a Hill Giant. Most nightmares are large, bipedal humanoids, as they reflect their creator; most are savage and primitive-looking.
Step 2) Modify stats and appearance of the creature with multiple rolls (1d4 recommended) on the d20 table below. 5% of nightmares can withstand the sun.
1. Resembles the dreamer. Similar face, perhaps even matching birthmark or scar; or dresses like him/her.
2. Hooflike or stumpy feet
3. Theriomorphic head, always a predator or scavenger beast
4. Weaponized hands. In lieu of hands (or fingers), beast has swords, knives, axes, etc. Upgrade damage appropriately (by a die category, if nothing else).
5. Terrifying bellow. Sonic attack which causes fear.
6. Ability to walk through walls (also applies to any victim it has snatched up)
7. Spits acid (d6 damage, aims for faces) and/or trails corrosive drool
8. Bloody stigmata or gaping wounds
9. Cries and pleads with the voice of a lost loved one - even as it's dismembering you
10. Inexplicably fears the common house-cat
11. Touch is venomous, save or die
12. The beast's gaze causes sleep, similar to the spell.
13. Leaves smouldering/flaming footprints for 2d6 rounds after it passes
14. Its passing causes livestock to give blood instead of milk
15. Chitinous or stony armor - improve AC by 1d4
16. Has baby-faces on its palms
17. Can short-range teleport through shadows
18. Spinning sawblades on hands (30%), feet (20%), head (30%), or chest (20%).
19. Can break up into a swarm of flies or other insect and reconstitute itself
20. It's a midget clown, because nothing terrifies my poor wife more. Plus roll three more times.
Feel free to add more horrific entries to this table in the comments below; maybe we can get to thirty without too much effort.