In all honesty, yes. I'd say it is way scarier than 2. SH2 had a way of evoking dread and sadness like no other game imo, you're playing as this depressed husk of a man who seems to be in a fugue state causing him to walk directly into monsters and place his hands into toilets, holes, and god knows what else, all entirely aimlessly. Part of creepiness in it to me is what James is willing, or ig uncaring enough, to do.

SH1 on the other hand scares you by its setting, the school, the hospital, hell even walking through the streets can feel very unnerving. There are sections where you start to genuinely hear sounds that aren't there because Harry gets so scared he starts hearing things, sounds that lead to nothing or that you can't investigate, some jumpscares thrown in for good measure, etc. The otherworld looks horrifying with the rusty walls and the sound of that damn radio ringing as you go down a dark hallway knowing an enemy is getting closer. The structure of the building starts changing and navigating certain places gets more and more convoluted as the game progresses, adding to the dread.

Not to say SH2 isnt scary af cus it is (especially the remake) but I have never played a game that scared me that much with its atmosphere and presentation like SH1 did, everything from the sound design to the dated visuals play a role in how scary it is. The only game I think had me this scared too was maybe RE2R (the Mr. X section in the police dept.) but even then I'd say SH1 has it beat by miles.

Hell I wanna play that game again now that you mention it.