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I was actually more scared of Crazy Hand, personally, as his apparition and laugh scared me a LOT more - I sitll get it though.
Now, aside the Redead from Wind Waker, the one thing that I especially remember scaring me as a child was the Knaarens from Rayman 3 Hoodlum Havoc.
Now, there are several reasons for that.
-Most of the enemies in that game are stuff like this psycho:
, and my 8 years old self didn't like that. Especially considering that you have to get close to them to deal damage.
- I was 8, it was one of my first time playing video games, and the Knaarens flat out said during the entire level (longest of the game) that they wanted to shower in my blood, let me run so that I'd produce more salt to eat, rip off my eyes and skin, etc. Oh and by the way?
-You. Cannot. Kill them. Ever. (except during the bossfight, but you're hitting the guy's energy staff, not the guy himself) There are the ONLY enemies in the game that you can't actually damage, and once you realize that at 8 years old in a game about punching, well... You tend to get scared. Especially considering that, again, it's the longest level of the entire adventure. NOT a pleasant one.
Oh and um, as for things that scared me for a little while, honorable mentions to the King Boo's laugh in Mario 64 DS and Phantamanta in Mario Sunshine. Those who played the latter know exactly what I mean.