This entry you found is on Statuses.gameScritps. This script manages the interaction between statuses, making a frozen character lose frozen and get wet when set on fire (burning), for example. It does not, however, control what the statuses do to the character. As Module 003 said, the madness status is hardcoded, so you'd need to script a behaviour of the character set on your custom status if you wanted to recreate it.

The easy way here, is to make a script that catches when the PSYCHOSIS status is applied to a character and use the function Module 003 proposed to force apply the status on the character. Here's what it would look like:

_Psychosis (Story script to catch who's target and who's the source of the effect):
Code
IF
   CharacterStatusApplied(_Target, "PSYCHOSIS", _Source)
THEN
   ApplyStatus((GUIDSTRING)_Target, "MADNESS", 2, 1, _Source);

This would force apply MADNESS to whoever had PSYCHOSIS applied, for the duration of 2 turns.