Hdeck, the config file is in the game's save game directory, which I think is in My Documents or something like that. It's Video.scr or Audio.scr, depending on what you want to modify. Just open the file in notepad, and set the file read only once you're done so it doesn't accidentally get overwritten by the game/patch/etc. Both files are commented by the developers as to what option does what, and the range of values.
Is this game at least a bit frightening or you just roll on zombies and laugh all the way?
Not really frightening; it's broad daylight and you're on a tropical island. Some zombies play dead with other mutilated corpses that look like zombies, and sometimes they'll go for a cheap shock value by having one jump at you when opening a door. I don't think either is overused so far, but if it's one of the basic zombies you can hear them groaning behind the door anyway. Some zombies, like Thugs, howl/scream in the distance and you can hear it echo about a good bit before you stumble across one. Those times you'll find yourself looking about to see if a zombie is merely making noise in the distance, or is charging you. Audio cues are pretty important as it's easy to get cornered or flanked in the close environments with limited line of sight, so hearing the groans of a zombie coming at you from the side/behind can easily make the difference between life and death in some situations.
You also won't really steamroll, either. It's an RPG, so the combat pacing is closer to something like Fallout NV than L4D. The zombies do have level scaling, though might be a smidgen below you. Sonly a rare few zombies actually wield weapons (that I've seen so far), it's not like Oblivion where bandits are coming at you fully kitted in obsidian. With the rate the weapons scale and your own skills, you'll *quickly* get to the point where you can one-hit kill the trash zombies with a well-place strike or critical hit. So even though they scale, it's not as WTF-inducing as Oblivion's original scaling.
I got in a few more hours of gametime today, and still really enjoying the game. Though, I did run into the alcohol "bug". Basically, whenever you have a full inventory you're supposed to hold the action key to swap with whatever weapon is on the ground. But the game doesn't make you hold, it just automatically swaps it out. Alcohol is a usable item, so it can be wielded like a weapon and is stackable. If you already have alcohol in your inventory and try to pick up another bottle, instead of just adding it to the pile in your inventory it disarms your equipped weapon then equips the alcohol. It's more annoying than anything, but if you don't remember to re-equip your weapon then you can find yourself getting drunk while a zombie happily chews on your face.
Anywho. I can easily see people really segmented over this game. The totally botched steam release gave them a lot of bad press, and the sheer divide between people who seem to have bug ridden experiences and others like me who are basically playing with no real issues just serves to split the likes and dislikes. Kotaku did an article on how the game got a range from 30 to 90 on review sites, kinda highlighting the segmentation I mentioned.