I'm no expert in this. I would suspect schizophrenia. My brother has it, and some of what you describe sounds familiar to what he went through. Last I heard, he's on the right dosage and medication and is doing better.
So out of interest I asked Gemini. OCD is a possibility. This is by no means fact.
Nightmares, waking up screaming, recoiling from distressing thoughts, vague hallucinations, and intrusive beliefs (like being spied on or fearing family members are skinwalkers) are serious, deeply distressing symptoms—but they do not automatically mean you have schizophrenia.
Your therapist's perspective that this could be related to severe OCD (often referred to in clinical settings as "OCD with psychotic features," "Obsessive-Compulsive Psychosis," or severe subtype obsessions like Sensorimotor/Somatic or Persecutory OCD) is a very real possibility.
Here is how these symptoms can overlap or present differently:
Why Severe OCD Can Look Like Psychosis
Intrusive Thoughts & "Skinwalker" Fears: OCD can generate terrifying, bizarre thoughts or fears that feel incredibly real. When anxiety levels spike—especially when off medication—the brain can experience intense paranoia or obsessions regarding safety, surveillance, or impostors.
Hypervigilance & Hallucinations: High levels of sleep deprivation, severe anxiety, and trauma or stress can trigger hypnagogic/hypnopompic hallucinations (vague visual or auditory hallucinations that happen when falling asleep or waking up) or subtle stress-induced hallucinations, which are distinct from full-blown psychotic disorders.
The "Shuddering and Recoiling": This is a classic reaction to ego-dystonic OCD intrusive thoughts or intense PTSD/nightmare responses, where your body physically reacts in horror to an image or thought your brain generated.
Key Differences Between OCD and Schizophrenia
Insight: People with OCD usually retain some degree of insight—meaning somewhere in your mind, you recognize that these fears are terrifying, strange, or something you hope isn't true (as you mentioned in your post). In primary schizophrenia, insight during an active psychotic episode is typically absent; the person fully believes the illusion without questioning it or hoping it's something else.
Sleep Disruption & Medication Rebound: Missing doses of psychiatric medication (especially SSRIs, antipsychotics, or sleep aids) can cause severe rebound anxiety, vivid nightmares, night terrors, and heightened paranoid thinking.
So again, this is AI's response. While it supports OCD as a possibility, it doesn't mean it is. But it sounds at least plausible.
I truly hope you can find answers and solutions to best help you.