In 1902, the Seer of Nantucket, Johnathan Kristofferson, went insane after attempting to communicate with the intelligence inside an ordinary a quail egg. (Communicating with the unborn is extremely dangerous, since their souls exist in both this world and the previous.) Over the next six weeks, he kept a meticulous journal that detailed his particular insanity. These journals have yielded the best working knowledge we know of Nantucket Madness.
Nantucket Madness is also known as liar's madness, since it thrives on untruths.
0 Lies. Near a wizard suffering from Nantucket Madness, there is a continual urge to avoid telling the entire truth. Indeed, telling the truth may even invite infection. The safest course is to say nothing that is entirely true. Even a small lies are blankets against the cold. In the terminal stages of the disease, the wizard becomes convinced that everything they see or experience is false. Everyone is an impostor, every sentence is a lie, and nothing is what it seems.
GM Notes: Basically, if you notice a player has said a few things without telling any lies, you are allowed to ask him to make a save vs. Nantucket Madness. Or if they already have it, save to avoid exacerbating the insanity. Give them some kind of cue--make sure they know the rules of the game before you tell them that they've lost it.
1 Infection. The other way to become infected is to take something seriously. Within the range of this madness, it is dangerous to take anything seriously.
GM Notes: Basically, whenever you notice that a player is doing/saying stuff that is logical given the current situation, you can call for them to save vs. contracting/increasing Nantucket Madness. The PC who is carrying a goose under one arm is safe from this chance, but woe to the PC who is using words like "tactically", "in order to", and "logically". They're fucked.
2 Tails. Infection brings tails. Not just fox tails and peacock tails (although those happen, too) but also things like telegraph cables, ropes, and tree branches. Almost anything can grow out of your ass.
3 Falsities. A cardboard sword can cut a table in half if it is wielded with enough sincerity. Waving your arms and babbling nonsense can result in real spells if performed with enough enthusiasm. Fake things are real here.
GM Notes: I'd involve some sort of charisma check, bluff check, or whatever here in order to see how well the fake thing works. Sillier things are more difficult to pull off. Alternatively, just let them use their Charisma score in place of Strength or Dexterity when figuring out well they are pretending that an umbrella is actually a machine gun. If you think this gives a huge advantage to characters with high Charisma. . . well, yeah, that's sort of the point.
4 Loci. Things seem to grow faces and speak to you. This is merely muttering for such things that are nearby, such as a couch, a potted plant, or a dog's asshole. But things that are farther away/bigger (such as building facades, horizon lines, and the sun) these interruptions take the form of full-blown conversation, usually ridicule or nonsense. These inanimate objects are powered by subconscious magic of the wizard's brain, and as a result, they are fully able to "fight back". If taunted, the sun might burn the offending parties in a pillar of fire, or a dog's asshole might fill the room with a poisonous gas.
GM Notes: Think more like Alice in Wonderland than complete psychosis. Since they are like programs hosted on the PC's brains, the loci don't know anything the PC's don't know.
5 Manifestations. Subconscious thoughts become reality. These manifestations are nearly always inimical, and never helpful. Those who are wandering within a wizard's zone of madness must learn to guard their thoughts. Wayward thoughts usually manifest themselves as hateful versions of the original thoughts. These manifestations are also lies, and can only be damaged with fake spells and fake weapons.
GM Notes: Like in Crichton's Sphere. Just pay attention to whatever your players are talking about, and sprinkle it into the game. Someone mentions taco bell? There's a bell on the table in the next room. Underneath it, a taco. But I guess use purple prose so it isn't so obvious and banal. If one of the players catches on and says, "This is just like in Ghostbusters where they tried not to imagine anything dangerous and that one guy imagined the giant Michelin Man monster thing, haha!", well, jokes on them, because the next room has a bunch of spectral ghostbusters with ghost traps ready to ensnare the party. Hopefully they'll learn to guard their words before someone says "dragon" or "balor" or "Chernobyl".
6 Dimensional Expression. Paintings sometimes step off the wall.
7 Dimensional Impression. The wizard eventually turns 2-dimensional and runs along flat surfaces. Although they can't fly, they're really good at getting through locked doors.
8 False Deaths. Injuries sometimes cause people to believe that they're dead. For example, a person might believe that an opponent's attack actually severed their head--and experience their head falling onto the ground, only to find themselves standing upright a few seconds later with a nasty gash along their head (but no other injury). Onlookers see the same thing.
9 False Corpses. False deaths leave behind false corpses.
Final thoughts: This is pretty meta. It might not be fun to play. (the DM just inserts monsters from our OOC conversations now?) It might be unplayable. It might require a lot of attention from the DM (noticing when players are forgetting to lie, or when they're talking about movies they saw last weekend.)
Basically, it's just a bunch of new rules arranged around a theme. You can introduce them gradually as they climb the wizard's tower, or just use the ones you like the most. I'd probably throw out #8 and #9. They seem the most persnickety.