I hear tons of theories about terrible, awful things happening to Madotsuki to lead up to the nightmares she has during the game... But what if she'd lived a perfectly normal life up until then...? What if everyone's just reading too deeply into things?
What if Mado is a schizophrenic? She could of lived a perfectly normal life up until schizophrenia began to manifest (which commonly manifests in the early to mid teen years -- seems about her age). One could say that there are two types of schizophrenics... the sane kind, and the insane kind. The sane kind know what's happening to them and can mentally cope with it. The insane kind... well...
How does this explain the things in her dreams, then? The people in her dreams may simply be things her mind invented. She may have never met anyone even remotely similar to the people in her dreams. They could represent nearly anything using this theory... they -could- be people she knew (or knows) and could be warped versions of them, or they could be figments she invented to serve one purpose or another.
About being a shut-in? Schizophrenics, especially the paranoia type, most often -hate- the thought of being watched. I speak from experience here, being the 'sane' variety of schizophrenic, when I say that doors, windows, and mirrors are absolute nightmares. "What's on the other side?" "What'll be there when I look?" "Will something be watching me?"
The same thought process spawns a fear of the dark. I know I personally can't have my eyes open when it's too dark. The "It can't get me if I can't see it" thought usually comes to mind. I know it doesn't make sense, but...
It would also explain the appearance of certain things. The fear of being watched spawns other fears... like the fear of eyes. Many things in Madotsuki's dreams have eyes when they probably shouldn't. The mind will also sometimes project a hallucination of a dark, shadowy figure with some features (in my case, the eyes and the eyes only) in white.
As for the suicide? The "Fatality Rate" of schizophrenia is said to be between 5-10%. Schizophrenia never kills anyone... but sometimes the person just can't cope, and the schizophrenic decides to kill themselves for whatever reason.
Where are her parents? Who knows. Could be just down the hall, or just downstairs. We don't know how much time actually passes for Madotsuki. The whole game could very well take the course of a single night. Wrought with insomnia, constantly waking up form awful nightmares, Mado gets the idea to be writing down what comes to mind, thinking she may want to show the 'dream diary' to someone. But she's afraid to leave her room to tell anyone, so she just crawls back into bed. Occasionally waking up to jot notes down in the diary.
To an outside observer, Mado was fine up until one night, when she seemed to just up and decide to kill herself. And the only hints anyone finds about her, are the notes she wrote down in the diary.