Since I've been using the term psycho noir a lot lately in interviews I think I should offer a definition for it, especially since psycho noir is a relatively new term that's been popping up mostly to describe movies like Blue Velvet, Fight Club and Memento where the protagonist is somewhat out of touch with reality.
As far as how it pertains to literature, especially for Jim Thompson's great noir books (Hell of a Woman, Savage Night, Killer Inside Me, Pop. 1280, etc.) I posted the following definition on my Hardluck Stories web-site when I was requesting submissions for my psycho noir issue:
"...where the protagonists perceptions and rationalizations are just off center enough to send them to hell."
The esteemable James Winter posted the following definition on his Northcoast Exhile blog, which I think spells it out pretty well:
"In psycho noir, the protagonist is, quite frankly, a scumbag, knows he's a scumbag, yet deludes himself that he is not."
My own first novel, Fast Lane, fits both of these definitions, and I think sits squarely in the psycho noir category.
As far as standard noir goes, I look at books like James M. Cain's "Double Indemnity" and "Postman Always Rings Twice" where the protagonist crosses a line and there's no turning--basically the equally esteemable Jack Bludis's definition of noir==screwed.
Anyone who has a different definition for psycho noir, I'd like to hear it. Also, let me know your favorite examples of it.