One hears of religious psychosis, with a 'Buddhist' element. As well as people who convert to or begin to study / practice Buddhism and seeming different, somehow worse; more solitary or unconcerned, etc..
What is going on these sorts of lives, becasuse I don't think "zen sickness" always applies to confusion with the dharma?
There are cases when someone gets obsessed, this is known as the Dharma fever. In my lineage this is not considered too bad. Many folks coming into Buddhism have preexisting aversion to this world. Generally speaking, my Buddhism is Buddhism of love and acceptance - if someone is in a difficult life situation and lost balance, or even never had it because that's how their life turned out, we see that with the maximum warmth and try to make the best out of the situation. In Varjrayana everything is energy, even the energy of confusion, so we try to use all that. I personally hate silent, sarcastic, and passive-aggressive treatment of confusion. If someone is completely off base, they need love and acceptance, not judgment.
The cases when someone gets arrogant and/or righteous are not tolerated well. Ego is the enemy of enlightenment, so spiritual snobbery has to be persecuted.
I've never heard of true madness, but losing a sense of boundaries is standard. This is where the personal presence of teacher and sangha comes in handy. Someone has to stop you when your head starts spinning, slap you on the face, bring back to the ground and give a hug. I miss my last teacher for that.
I think that psychosis is a state of disordered thinking, confusion, delusion (a "mental disorder").
It might seem, superficially, like Buddhism -- some withdrawal from ordinary worldly activities and concerns, for example, an unusual understanding of what's valuable, of who owns what -- sometimes also grandiose delusions, or a wide range of other possible symptoms, for example flattened affect, and so on and so on.
What is going on these sorts of lives
Well, by the definition in your question, you're saying that psychosis is going on.
It might possibly be that Buddhism (a Buddhist environment, values, practioners) is helpful for them and for those around them -- psychotic people behave abnormally, and maybe uncooperatively, and/or are less able than you might want them to be. So your being able to detach a bit from what you expect of people -- your wanting to behave morally, independently (or unilaterally) of whether other people are behaving too -- might help to enable a better relationship than otherwise possible.
The rule of the thumb is that if someone becomes depressed or suicidal or negative or exhibit behavior that is harmful towards others, then they are doing it wrong.
One example of this from the Vesali Sutta are the monks who got too obsessed with the meditation on unattractiveness meant to overcome lust, and committed suicide. The Buddha then advised the remaining monks to switch to the mindfulness of breathing to create positive feelings, if they became negative by practising something else. This is just like driving a car - if you are veering too much to the left, then turn the steering wheel to the right and vice versa. The goal is to reach the destination safely.
The second example of this from the Alagaddupama Sutta are people who learn the teachings of the Buddha but do not truly understand it and do not practice it. Instead, they use it to attack others and defend themselves in debates. This is a philosophical obsession.
A third example from the Acintita Sutta are people who are obsessed with useless metaphysical speculations, which drive them to madness.
However, spending time alone to reflect upon the teachings and meditate, rather than having a good time with the cool folks - that's quite acceptable.
An example of this comes from the Vajjiputta Sutta:
On one occasion a certain monk, a Vajjian princeling, was dwelling near Vesali in a forest thicket. And on that occasion an all-night festival was being held in Vesali. The monk — lamenting as he heard the resounding din of wind music, string music, & gongs coming from Vesali, on that occasion recited this verse:
I live in the wilderness
all alone
like a log cast away in the forest.
On a night like this,
who could there be
more miserable
than me?Then the devata inhabiting the forest thicket, feeling sympathy for the monk, desiring his benefit, desiring to bring him to his senses, approached him and addressed him with this verse:
As you live in the wilderness all alone
like a log cast away in the forest,
many are those who envy you,
as hell-beings do,
those headed for heaven.The monk, chastened by the devata, came to his senses.
