Horror by definition:
a) an intense feeling of fear, shock, or disgust.
I felt that way about the prison and scenery itself, not to mention the Xeno. Alien did that for me too, the environments made me feel horror (The Derelict, LV-421, Nostromo), not just the Xeno.
Aliens is thrilling, suspenseful, and even action packed, but it did not make me feel ill like Alien and Alien 3 did. Ill as in turned my stomach and made my mind crawl with thoughts.