The two games operate on entirely different levels.
Resident Evil is an action/adventure game wherein you're confined to a small space, and have to fight off increasingly fierce monsters with an every dwindling supply of ammo. That's what drives the fear in RE games. The thought of "what's coming up next? Am I going to survive it?" There's some subtle things they do such as the "heartbeat" while opening doors in Code Veronica. My all time biggest fright was the interrogation room of RE2. I'll say no more.
Silent Hill plays head games with you. Sure, you still have monsters to contend with, but they're a lot less important to kill. But where this game gets to you is on a much more psychological level. Upon entering a room you might hear footsteps, only to see that there's no one else in the room. You might hear a child crying, but be completely alone. You might hear the sound of a window breaking, but when you look around the windows are all shut. To this day the hospital terrifies me more than anything, but the school is almost as bad. Especially the scene where the phone rings...
In terms of straight up fear I give the edge to Silent Hill. In terms of overall gameplay I probably have to give it to RE.






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