What does this power do? Does it only inflict a mental trauma? OR does it also allow you to manipulate the mind of your target and make him believe something that isn't true?

Remember, that with any Psyker ability, you have to first look at its power level. In this case you're dealing with a minor ability, one such that low rank Psykers, Higher rank Adepts or Nascent Psykers could easily use.

In the hands of an attacker... whom a party doesn't realize is there, an enemy Psyker could single out the biggest threat in a group and reduce them to a gibbering wreck in mere moments, mainly because the range on this ability is so far (100m). This is a tactic I used once while GMing.

No, you don't give them an effect of your own choosing. This power, like the warp itself, is pretty chaotic.

I think u probably want the errata clarification - with that the description should be "You reach into the mind of a target within Range and force the target to experience images of utter insanity. The target is entitled to a Willpower Test to resist this power. On a failed Test, the target must roll 1d100 and consult Table 8-6 Mental Traumas on page 235."

Is that clearer?

A d100 roll on Mental Trauma won't reduce anyone to a gibbering idiot, just make them fidgety, unless there are modifiers like those you get from failing a test to avoid Mental Trauma with Degrees of Failure (which by RAW this isn't).

This would be excellent for applications like disrupting a demagogues speech for example. He's up there on the pulpit expousing his herectical version of the imperial cult and he is suddenly visited by a vision of madness. Or during tense political negotiations.

Could go a long way to destroying credibility, and could even make the seaker question what they are saying.

Or when standing in a que to have your (forged) papers checked by enforcers, you cast it on someone further up the line, bam, instant distraction.

Or cast it on the (other) party psyker to ensure that they get exectued by the rest of the PCs instead of your character (okay this one is a joke referencing another thread).

I just realised that I have been referring to'casting' this ability inmmy previous post. I actually really dislike the idea of 'magic' and 'spells' in DH so please all accept my apologies.

I shall report to the nearest termination booth immediately.

Zakalwe said:

Thank you for calling 1-800-SUICIDE
If you wish to self terminate by electric shock, press 1.
For termination by overdose, press 2.
If you would like to make a reservation to visit our drowning pool, please press 3.
For termination by hanging, please press 4.
For death by self Inflicted gunshot, press 5.
To speak to a representative, stay on the line.
If you do not wish to die, please hang up now.

I prefer "manifesting". I make manifest the warp itself, regardless of what I happen to be doing with that energy/substance.