This is a recurring dream, and is set up like a video game. It takes place in a nameless city, and the players are supposed to wander around aimlessly, dodging psychopaths and trying to find a way out. It reminds me of a story in the 8th Sandman comic, World's End, where a man gets stuck inside the dream of a city and has to wait until he sees a familiar alleyway or door, and once he walks through it he will be home again.
Alan and I were playing the game together, and have done so previously when I've had this dream. It's interesting because when you play a video game like Resident Evil for the first time, you pick up clues and know which places you should and shouldn't go to, etc. That's how this dream was. I remembered that when we walked down a certain alleyway, Alan was attacked. So we remembered not to go that way this time.
This time, we entered some kind of twisted beauty parlor run by a local gang. They captured people on the streets and brought them back here for alterations. When we walked into the building, we saw about a dozen horribly disfigured people: missing a leg, eyes carved out of their heads, both arms chopped off. They were chained to their chairs, all bleeding and screaming, and the gang of men was simply letting them die slowly and painfully. When we walked in, they looked up at us and said "We want your arms." We quickly left and they didn't follow us, but later on we witnessed one of them sneaking up behind a woman who was the girlfriend of one of the gang members. She was holding a baby in her right arm, and a man came up behind her and cut off that arm so that it and the baby fell to the ground. He laughed, expecting her to laugh with him. She was calm about it, told the guy "Next time give me a warning, at least!" and kept on walking.
The city was dark and wet; it never rained and the sun never came out. It was cloudy and windy all the time, and all the buildings were covered with graffiti.
We walked through a few alleyways, where old friends from the other times I've had this dream recognized us and said it was good to see we were still alive. One of them, a crazed older man in a chicken suit, danced around in an alleyway all day and helped out anyone who seemed confused. We needed to find him this time but we forgot which alleyway he was in, so we went to a restaurant whose owners we became friends with last time. They gave us the same directions they'd given us to find the chicken man before, because in a previous dream we needed to find someone who could tell us how to get out of the city. The chicken man didn't know, but he had pointed us to another man who regularly left the city and returned to help other people. I'd woken up before meeting this man the last time. So this time we needed to get those directions from the chicken man again. We eventually did follow the directions of the restaurant owners, and found the chicken man dancing in his alleyway. He spoke in a nervous, high-pitched voice, dancing all the time. He gave us the same directions he did last time, telling us that we'd eventually find our contact in an abandoned subway. We got to the subway in time to see our contact being ripped to shreds by the beauty parlor gang. We ran away quickly.
We ended up at a vacant lot. There were about half a dozen people walking around with televisions for heads, and each of them had a few people following, trying to look at the screens. The TV-heads were carrying large bats, and when their followers annoyed them they'd knock their heads off with the bats. We wanted to get through this crowd, but a car full of girls pulled up beside us. They were being chased by another car, and they yelled out "You don't want to go that way! Come with us!" We got into the car with them and they sped off, swerving all over the road and not hesitating if they hit someone. The driver turned around and said she was going to an ex boyfriend's house to settle some business. We arrived at his place, and he answered the door with a big grin on his face. The girl told him, "I'm going to kill your dog."
The grin didn't leave his face. He said, "Oh! Okay!" and let us all into his house. He looked at me and was about to say something, but the phone rang in real life and I woke up.