Sounds perfectly clear to me. He was looking for something that in reality wasn't there, but in his delusional state he thought he found. Like a junkie in withdrawal seeing bugs crawling all over their skin.
I thought it was quite clear. i interpreted it as a humorous turn of phrase to say that not only did they hallucinate the belief of the fossils, but then they also hallucinated the fossils themselves, and later started seeing them everywhere.
Agree, quite clear, nice writing.
"and looking for non-existent fossils, which I found. I eventually saw petrified sea creatures everywhere and stopped going to work, or answering my phone, paying bills, etc. Things ended predictably, in horrible slow motion."
=> I think he just interpreted "normal" patterns in stone as fossils
To be fair, it's pretty easy to find fossils of sea creatures if you look in road cuts that go through sedimentary rock. It's not some rare phenomenon that only occurs in a few places in the world, it just takes a few minutes of Googling and then looking around on Google Maps.
Is it a bad sign if I found it completely comprehensible? OP saw fossils everywhere. I can sort of see how someone who has "lost their marbles" might see rocks in such a way. Overall it sounds very Lovecraftan with ancient giant monsters and all. I wonder if OP was previously a fan of Lovecraft?
That's pretty good writing from the author. Don't advice people about things you might not be sure about.
OP wanted to give a more humorous, literary tone to his history and the GP interpreted it as literally as possible. I would rather bet that OP has asperger than OP has schizophrenia.