When something goes wrong 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.