I have seen many people play a great Tremere, or Brujah, and many experienced role players take on a Malkavian character and completely mess it up. This was for a very simple reason, they played "fluffy" characters. They mistakenly assumed that Malkavians were a "comic relief" clan in the World of Darkness. Their characters did odd, stupid, and sometimes downright silly things. I saw a coterie of Malkavians who wanted to ghoul an elephant. Why? Because Malkavians are crazy and that is what crazy vampires would do.
That struck me as a really bad explanation. Ted Bundy, Adolph Hitler, and Hannibal Lector were crazy. Could you see any of them becoming vampires and ghouling an elephant? Edgar Allen Poe was definitely not mentally stable, but had he become a Vampire, he certainly wouldn't have ghouled an elephant. Another thing people forget, insane doesn't mean stupid, or even bizarre. Most insane people are above average intelligence even, often geniuses. Their minds do not work the same as normal people's, they tend to look at problems differently, see the world from a different perspective, but they see it clearer too. That is what made Hannibal Lector so frightening. If you want to know if your Malkavian is fluffy take this simple quiz.
Scoring: Give yourself no points for an A, one point for a B, subtract one point for every C, and two points for every D. 8-10 You are Malkav himself. You broke your mirror years ago. 5-7 You can pass for an insane Tremere any day. 1-4 You have the idea down, you just need to get it out better. 0 You need to reread what I just wrote. -1/-5 What the Hell are you playing? Brujah are violent, not insane. Maybe that clan is for you.
Derangements: Multiple Personality, Paranoid, Angelism (he's convinced he is 007) be careful you don't become too fluffy and comic with this role though. Remember, the character feels his life is in danger at all times, he is surrounded by his enemies.
Merits/Flaws: Acting aptitude, Acute senses (any), Eidetic memory, danger sense
Disciplines: Auspex at least two levels, Obfuscate
A second hint is for the Storyteller to remember he has a Malkavian in the game. Don't expect him to always do all the work with his derangement. If a character has Angelism and believes he is Jesus Christ, tell him what he's seeing in his world. Should that character decide to embrace someone, don't say "You bend down over the body you've just drained of blood, cut your wrist and allow a drop to flow into their pale blue lips...she coughs and slowly opens her eyes again...eyes no longer shining with light, but tinged with an internal damnation and growing madness." Describe the scene through the Malkavian's madness, something like this "You walk up to the corpse, you can't tell how she died, but she's definitely gone from this world. You approach her body, and lay your hands upon her brow. You beseech your Father in Heaven, and are answered when your hands begin to glow with a pale holy white light. Her pale blue eyes open, looking up at you with love and devotion. A miracle has occurred, you have returned a soul from Heaven, all according to your Father's great plan." If other characters are present though, make sure they see what is actually happening too though.
Another fun thing is to occasionally remind players that Malkavians while mad, have at times a clearer almost uncanny sense of what is really happening. Should you have a character suffering from Paranoia, who is always convinced someone is following them or watching him, come up to him and begin to tell him that he's getting weird vibes. During the story continue to drop hints that he's being followed, continue along by giving hints of what is following him too. Hints of a lupine, or mage, or something that the group really can't handle if it surprises them. Most of the players will ignore the Kook, "He's just having a fit again." Then later in the game, drop that lupine on the party. Make sure it surprises the characters, with the sole exception of the Malkavian who knew it was there all along. If you want to get really sick, later in another game do the same thing, but this time don't have a lupine or mage pop up. This time it really was just the Kook having a fit, but the players will be on edge the entire night, remembering the last time.