Pretty tight writing here.
My big question: where was this found, and how did it come to the foundation's attention? It seems like it should have a history to go along with it.
Also, while the description is very data point through, I think we could use some creepy details here and there..maybe some names of works by the XXXX-4 manifestations might work, or the macabre things they do otherwise that show their devotion to the the "Laughing King." Maybe the -1 and -3 manifestations have some creepy names too?
I think the mental illness vulnerability is a bit a generic, and doesn't really add anything. A specific mental problem, maybe history of schizophrenia in the family or something could add some more flavor. How about a history of excessive hypnagogic imagery before the onset of sleep?
A caught a typo but now I've forgotten it. I'll refind it and post it in a sec.
I look forward to your completed work!