All right, I'll give this a shot. Sorry for the length.
Oh, and there be Lurking Horror spoilers below.
Dave Lebling claimed to be heavily inspired by H.P. Lovecraft when he wrote Lurking Horror in 1987, in which the player encounters mysterious mounds, creepy burrows, horror-inducing creatures and diabolical, forbidden magical experiments in a 1980s MIT-like setting reminiscent of Miskatonic University. (Not just reminiscent, though -- see interview at the bottom of this post.)
The original game box contained the usual "feelies" including a document entitled, "From G.U.E. Tech at a Glance: A Guide for Freshmen". One section towards the end reads, "Whatever you do, avoid Prof. Hamstop's astronomy classes. He's a tenured bore, and you can probably learn more by just gazing at the sky. Also beware of: Prof. Tighe's Intensive Metallurgy course; Dr. Morlock's Introduction to Fuel Gas Engineering; Dr. Negele's Moral Philosophy classes; Prof. Carlsen's seminar in Textile Technology; and any junior instructor."
The game: It's dead of winter and you're in a computer lab, facing pressure to complete a twenty-page paper on "modern analogues of Xenophon's 'Anabasis'". As you work on the assignment, you find that the document has been magically replaced by something else that bears no resemblance to yours. It's written in "a sort of 'Olde English' that you've never seen before.", and "a combination of incomprehensible gibberish, latinate pseudowords, debased Hebrew and Arabic scripts, and an occasional disquieting phrase in English." As you read it, you realize that it's describing the summoning of a "visitor". A page appears containing a poem written in the same script that is accompanied by "queasily disturbing" woodcut illustrations:
"He returns, he is called back (?)
The loyal ones (acolytes?) make a sacrifice
Those who survive will meet him (be absorbed? eaten?)
They will live, yet die
Forever will be (is?) nothing to them (to him?)
"His place (lair? burrow?) must be prepared
His food (offerings?) must be prepared
Call him forth (invite him?) with great power
Only an acceptable (tasteful?) sacrifice will call him forth
He will be grateful (satiated?)"
The rest is even more fragmentary.
(Even more spoilers!)
The text then magically transports you to another realm where, in a "black basalt bowl", you make your way through a crowd of unidentified creatures who worship a strange stone that's marked with a strange claw-like symbol and guarded by a terrifying creature that soon devours you. This turns out to be a nightmare, and you awake back in the lab, holding the stone.
An NPC informs you that your paper was "mixed up on the file server with some files from the Department of Alchemy" and was somehow swapped with another paper entitled "Lovecraft." The NPC suggests looking for help from unknown sources "down there" and you soon set off alone, in search of answers.
In the course of the game you encounter a reanimated janitor, a mysterious creature that seems to be stalking you, a blood-covered sacrificial altar, swarms of fleeing rats, a kind of catacombs underneath the university, mobs of grotesque "urchin" creatures and mad professors conducting sinister occult experiments that go horribly awry. And there've been reports of students disappearing mysteriously. And, almost needless to say, there's some kind of a tentacled beast from the beyond that, as it turns out, has somehow breached and infected the campus computer network.
That's pretty much where, I think, the resemblance to and inspiration from Lovecraft literature ends. And the game, while creepy at times, isn't really as scary as you might hope. This might be because Lebling was limited in how much material he could actually use. In an interview with Brass Lantern he remarked, "I'd have loved to have done 'The Lurking Horror' as a larger-size game (it was almost the last of the "small" games which had to fit in 84k bytes of disk space). Some good scary stuff got cut out of it or never implemented due to the size restrictions."
Here's Lebling talking about the inception for the game in a video interview recorded in 2011 by Dean O'Donnell for WPI Tech:
Lurking Horror was sort of a combination...it was inspired by my own experiences at MIT when I was an undergraduate, because "G.U.E. Tech" in the game is quite obviously geographically nearly identical to MIT...that and my enjoyment and and love of the works of H.P. Lovecraft. And I would try to put something kind of Lovecraftian in an MIT setting, and that's what inspired Lurking Horror.
I figured it actually flowed very well out of Lovecraft works, because in his books there this place called Miskatonic University, which is, you know, where the professors are all raising demons and they've got books that you shouldn't open, and all this kind of stuff. So my theory is that what happened is that after all the troubles in the 20s and 30s, which was when Lovecraft was writing these novels, there were always these nasty Miskatonic Universiy things going on.
They got in trouble, I think, and they probably nearly went out of business, closed down as a university, but some benefactor named George Underwood Edwards (G.U.E.) put a lot of money into Miskatonic University and in gratitude they renamed it in his honor. So G.U.E. Tech, aka G.U.E. Tech, not to be confused with MIT or WPI Tech or any place like that, continues on as a thriving technological university with a sideline in demonology.