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Of the four big-budget Xbox 360 games shown last week at Microsoft’s X10 media event in San Francisco, I came away most impressed with “Alan Wake.” Sure, “Halo: Reach,” “Fable III” and “Crackdown 2” all looked like they have the potential to be excellent, but as the only Microsoft-published title that was playable on the show floor, “Alan Wake” looked most like a game, as opposed to a collection of cool ideas and staged demos.

Based on what Finnish developer Remedy Entertainment showed off, both in a half-hour presentation and in a level that journalists were allowed to play, the game is nearly done, a pleasant surprise. First announced in mid-2005, before the Xbox 360 was even on the market, “Alan Wake” had started to turn up on year-end lists of vaporware — once promising titles that are currently missing in action.

Due out May 18, “Alan Wake” is a psychological horror and action game set in the fictional town of Bright Falls, Wash. It looks like what you might get if Stephen King wrote a video game script right after watching nothing but “Twin Peaks” for a week straight. The game begins with horror novelist Alan Wake arriving in Bright Falls with his wife, Alice. She’s brought her husband to town because she hopes its seclusion will help with a horrible case of writer’s block.

It’s not long, though, before Alice goes missing and Alan is struggling to account for a missing week’s worth of time. What’s more, he starts finding pages of a horrific new manuscript written by him that he doesn’t remember creating. And it’s all coming true. Oh, and some of the townspeople seem to be controlled by a dark force that turns them into supernatural-looking, nightmarish killers, bent on tearing Alan to pieces.

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During the presentation, lead writer Sam Lake confirmed that the game has been playable for about a year. Aside from a few minor glitches where dialogue didn’t properly sync up, the levels of the game we saw looked ready for prime time. The presentation began with the Wakes’ arrival, with panoramic shots that reminded me a lot of “Twin Peaks,” David Lynch’s early ’90s murder mystery TV show set in a quirky Washington logging town. Lake confirmed this when he mentioned that show, along with “Lost” and the writings of Stephen King, as heavy influences on “Alan Wake.”

Once the stage for the game was set, the Remedy folks skipped ahead in the action a bit to a nighttime, outdoor scene at a dam. This chapter, which began with a cool, TV-style “previously on ‘Alan Wake’” recap, showed how the the interplay between darkness and light will guide much of the game’s narrative and action. In short, everything that wants to kill Alan resides in the darkness, and the light will keep these forces at bay.

I got to experience this first-hand when I played an early level of the game. Based on the short, introductory movie, I’d guess it was the first level right after Alice goes missing.

After Alan’s car crashes, your job is to get to the relative safety of a gas station, traveling on a forest path and through a lumber yard. (There’s that “Twin Peaks” influence again.) As I made my way down the path, I would occasionally have to fight these freaky shadow people, using Alan’s flashlight to essentially stun them while I fired a gun at them. When they “died,” they dissipated into crackling bursts of energy.

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Remedy ratchets up the tension during these combat-heavy moments by limiting your supply of ammunition. Even the flashlight you use to navigate the levels has little battery life. You’ll be tentative and frightened of the game’s visceral shootouts while also wanting to hurry them along in the name of conserving precious resources. It’s a tense high-wire act, and what I saw of it worked beautifully.

I also stumbled across manuscript pages from the book Alan didn’t remember writing; these pages would essentially tell me about what horrors were soon to befall me. The gamer in me wanted to pick these up and read them, to learn more about the world. But the scared little kid in me thought it was better not knowing about the maniac lying in wait for me and just dealing with him when I got to him.

The game also appears to toy with players’ expectations. At one point during the presentation, I heard an enemy yell, menacingly, “A fish diet is a healthy diet!” just before trying to rip the player’s head off. I don’t know why that particular man yelled out that particular phrase, but the overall effect was surreal and slightly disarming.

“Alan Wake” looks to be more than wall-to-wall disturbing images, though. During the dam scene shown off during Remedy’s presentation, Alan was accompanied by his agent, Barry, and the sheriff of Bright Falls, Sarah. (Apparently, Remedy has fallen into the common trap of giving a city a “Sheriff,” a designation normally reserved for county law enforcement officials.)

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While a lot of the supporting characters’ functions seem to be to lay down suppressing fire, Barry, at least, packed some comedic potential. At the start of the dam episode, he appears wrapped in Christmas lights and wearing a coal miner’s helmet-mounted flashlight, you know, to stave off the light-sensitive bad guys.