Last night we were playing story #4 and I had the lantern and was alone in a room (no monsters or investigators or anything) and the keeper tried to use uncontrollable urges to make me discard the lantern so that none of us could avoid the darkness they were putting everywhere. However, I argued that, since the lantern says that you discard it “to deal 3 damage to a monster” and there were no monsters or investigators I could do it to, I had no legal target and, therefore, couldn’t use it. We debated back and forth and took a vote, and of course all the investigators voted that you couldn’t (since we needed it to win) and we kept it. Needless to say, the keeper wasn’t happy. Were we in the right or the wrong here?

While it pains me as a Keeper to say it (however, the rules lawyer in me comes first), the players were right.

"Q: Can the keeper use Uncontrollable urges to make an
investigator attack another Investigator with a weapon?
What about spells?
A: No. This only allows him to use a spell, equipment, artifact
or tome card. If he forces an investigator to cast a spell, he must
choose a legal target. To clarify, if a spell says “choose a Monster”,
it may not be used against an investigator (even if playing Story 5)." (FAQ, p. 3)