Okay, having run low on sleep and spending a couple hours on TV tropes' high octane nightmare fuel page I got curious as to what are the creepiest or downright scariest thing you have seen in a genesis game.
Here is my experience. Dead of night on a saturday in a dark basement playing Aladdin in the cave of wonders stage. When you fall into the lava you don't get the death animation but rather get shot back to the previous checkpoint. I ran out of continues and lives.
3 seconds of dead black screen and I was greeted by a sinister hiss and the cold scowl of jaffar. Needless to say I had trouble sleeping near TVs for awhile and to this day I rarely play Aladdin on genesis.