His willingness to condemn the Atlanteans to death despite Milo's protests.
That whole scene where Milo does away with Rourke. Milo stabs him with some broken glass from Kida's containment box and turns the man into a roaring, monstrous crystal creature with red eyes. The creators of Silent Hill would be impressed.
Even before that, when Rourke is trying to kill Milo on the zeppelin. Before, hey, he's a little angry HOLY SHIT HE'S GOT A FIRE AXE!!!
The fact that he was still going after Milo even after being transformed.
When Rourke throws Helga from the balloon and she falls between the propeller blades? Not to mention the implication that the fall broke her back.
Not only that, but look at his crystal form. Kida's is glowing and almost goddess-like. Rourke's crystal form looks like it came from the depths of somebody's nightmares.
His scream when he goes crystal. Jesus!
Rourke's transformation in general. In particular what happens when it starts—he gains an absolutely terrified expression when he sees the crystal spreading across his arm, and starts rubbing said arm, as if desperately trying to stop the crystal from spreading to no avail.
The Leviathan. It's a crustacean-shaped MagitekMechanical Monster with glowingred eyes and a deadly particle beam Wave Motion Gun. Official measurements of the Ulysses state that it is 115 meters (roughly 377 feet) in length. The Leviathan's smaller claws are large enough to wrap fully around the Ulysses, and from turnarounds, appear to be somewhere near a twelfth of the Leviathan's total length. That gives the Leviathan a length that would be better measured in miles (being somewhere in the range of 12-14 thousand feet long, or 2-2.5 miles).
Rourke: What is that, a pod of whales?
Mrs. Packard: Nuh-uh, bigger.
Watching it kill the Ulysses. Good God, so many people die, on-screen!
Considering how it shredded the Ulysses, one has to wonder...what the devil was it built to defend Atlantis against?! The other cultures of Earth were at the dugout canoe stage, at best! (The sequel provides at least one candidate in the form of the Kraken...)
Atlantis IS an empire, and the King was trying to wage war (against Athens, judging from Plato's texts...). Which also creates another point of Nightmare Fuel: imagine you are one of those people in a dugout canoe, just minding your own business...when suddenly a two mile-long LOBSTER OF DEATH erupts from the water, flies over to your village (it was flying in the prologue), and flash-fries it in an instant.
Worse, the opening shot of the prologue shows that there were four of them coming in formation from a single direction. Atlantis had a FLEET of those monstrosities.
The Crystal Chamber can be considered Nightmare Fuel, if only in the sense that it's an eerie environment. Think about it: It's underneath the city, in a darkly-lit cave, where the only light source is the Heart of Atlantis, which gives off a creepy, blue glow. Not to mention that, hovering around the Heart, are huge, ominous rocks carved to resemble the faces of ancient Atlantean Kings. To a child watching the movie for the first time, it can be somewhat unsettling.
Helga: C'mon, let's get this over with! I don't like this place.
What's more unsettling is the part where Kida transforms into the crystal being, because anyone can tell that that's not really her anymore, just some...thing using her body as a vessel.
Rourke kicks a pebble into the water, and the Crystal's color suddenly goes from ethereal blue to blood red. And the mysterious humming noise it emanates? Closed captions describe it as murmuring voices.
Seeing Rourke's men get absolutely destroyed and killed by the protagonists in the final fight becomes unsettling when you realize besides the main characters they were the last survivors from the crew besides the ones killed by the Leviathan and that the protagonists basically committed mass murder by blasting the remainder of the crew to bits with lasers without a hint of remorse. All this happened after the protagonists already had a funeral service for the ones that already died and protested to killing people they were affiliated with.
Sort-of justified, since they were going to kill off an entire civilization just for profit.
The opening scene of the movie provides some Fridge Horror. After an introductory quote from Plato, we're treated to a scene of a calm ocean landscape. Suddenly, there's a bright flash and a fleet of Atlantean vehicles outrunning a mushroom cloud. The king later explains he wanted to weaponize the Heart of Atlantis, apparently as an ancient equivalent to an atomic bomb.
The sinking itself is also chock full of this. Never mind Kida losing her mother, the barrier doesn't cover the entire city, leaving those trapped outside to die.
We aren't spared any details either. We see a couple hugging each other as they watch the waves crash through the city, and the terrified final moments of the people who were right on the edge of the barrier banging futilely on it as the wave overcomes them all.
Atlantis: Milo's Return
The first portion of the film takes place in Krakenstaff, an eerie Norwegian town populated with blankly-responsive townsfolk and controlled by Edgar Vulgud, a malicious old man in cahoots with the Krakken, a horrific mind-controlling tentacled sea monster. Dagon, anyone?
The Krakken is so large, we never see the entire thing in view. Only closeups of its body...
Actually, you do see the whole thing at one point. Doesn't make it any less horrifying since it's a massive mess of glowing eyes and tentacles with a titanic maw.
Not only that, but it can also hypnotize you and is shown to be intelligent enough to willingly attempt to exert control over a town full of people.
There's a deleted scene where a woman is asking her baby to give her a hug and it's a baby Krakken. *shudders* A disturbing nod to the The Shadow Over Innsmouth plot point of the Deep Ones mating with humans to yield monstrous offspring.
The Dust Coyotes. Imagine you are just walking along somewhere, not a care in the world, and suddenly a dust storm appears out of nowhere. Then you hear the howling and thousands of red eyes start staring at you with malicious intent. Then the dust takes on the form of thousand coyotes, all of which are snarling and howling and with the intention of ripping you to shreds. Imagine seeing them at night. Yeah, sweet dreams.
And if that wasn't enough, the villain of that particular part has...something done to him by these coyotes.