The Gargoyle is a creature from the short story, I'm Telling!.
It's a creature that has the power to use it's saliva to turn anything to stone. Adam discovers it, and notices its powers. He takes some of its salivia in a water gun, and he tests it on a tree, and it works, but he uses the saliva on his sister, turning her into a statue.
The Gargoyle can be found in the master bedroom in the Dead House, the player must put it's saliva in a container and use it against the Monster Blood.