Horror is quite a peculiar genre, requiring a lot more suspension of disbelief than others and is usually much more effective the more it leaves to the imagination. Which is why it tends to work much better in prose, or graphic novels, where your mind has to fill in a lot more between each sentence or panel with your own personal terrors. This is true for all the greatest horror writers like Poe, Lovecraft, or Stephen King, with very rare exceptional adaptations actually doing justice to the original work. In the case of Lovecraft, i'm still waiting for a good one, despite all the attempts.
When the suspension of disbelief is stretched too far, horror quickly turns into into its opposite - comedy. And the line between these two genres is surprisingly thin. Often fused to great effect in many movies - Peter Jackson's early filmography being a prime example in my mind.
Junji Ito in particular doesn't really know how to end a story most of the time and he tends to lobotomize his characters of most of their common-sense... This is fine in manga format, where the ambience and pacing superbly make up for it. But on screen they just become exacerbated. I refuse to believe it's impossible to adapt and i rather think the story-boarding work for this anime was rather lazy - basically adding frames to Junji Ito's panels, beat by beat.
This is the third peculiarity of horror adaptations: different media require different approaches and the more faithful you try to be to the written word the less effective you will generally be in a visual format. This becomes a huge problem where you are much more likely make a good horror movie, the more you stray from the original work (and the more you risk alienating fans) - a fact that is masterfully evident in The Shinning. But you wouldn't need to go to that far to make a better adaptation, had the story-telling not been absolutely flat and linear, had there been more creative applications of rhythm to the scenes, paired with better sound design, better animation, better camera work, better almost everything...... This could've easily been double the score.
