The graphics engine is based on the classical formula of prerendered backgrounds with 3D polygonal characters. That's the same system used in all Resident Evil titles (leaving aside Resident Evil: Code Veronica) and in Dino Crisis 2. This system has its limits (fixed camera angles, limited possibility to use real-time light effects) but can also be a precise stylistic choice. Fixed camera angles give less freedom to the player, but can create emotionally strong situations. For example, in Alone In The Dark 4, sometimes you see you character looking at something frightening on the other side of the room, but you can't actually see what he is looking at and this creates suspense.
The light effects are fairly good, and the light coming from your torch (you can move it using the left analog stick) is extremely realistic. Anyhow, Alone In The Dark 4 looks definitely like a PsOne title. It's evident the game has been not originally developed with the PlayStation 2 in mind. All the special effects are simply cheap. I've seen better rain effects on PsOne, and the prerendered water in the sewers looks bad in a PlayStation 2 title.
The characters and the monsters are detailed, but when more than two of them are on the screen, slowdowns become unbearable. The framerate is extremely low; the game seems to drop frequently to 20-25 frames per second.
Sounds are surely the best feature of Alone In The Dark: The New Nightmare. Sound effects are varied, scary and are a strong support to the weak graphics of the game. From mysterious whispers to sinister groans, the developers created an excellent scary background for the adventure.
Characters' voices are good too, even if the lip synch is completely absent here, and that's evident from the very beginning of the game, in the intro movie. Both during CG movies and real time rendered sequences, you'll see the characters moving their lips independently from what they are saying.
Music is not innovative, but there are good orchestral themes that fit nicely the atmosphere of the game. Overall, good sounds.
The annoying loading times will probably keep you from playing the game again after you have finished it. Anyhow, there are two stories to play and if you are a hardcore survival horror player, you'll probably play both of them.