There's many great answers to this already, I would add only a little more.
Having studied Psychology (and having my Bachelor's in that very Field), I can't say Lycanthropy is connected strictly to Schizophrenia--a condition having its own misconceptions and inaccuracies thanks to the Media--but it is certainly resultant from some form of severe Mental Disorder. One prone to Delusional Thinking, which does include Schizophrenia, but also Dissociative Disorders--Disorders wherein one has a sensation of not properly being one's own self--Dementia and Delirium, Drug-Induced States, and others. (It should also be noted here that the Stereotype--not indicating that one was presented in any reply, I might add, that Schizophrenics are prone to Violence is largely false as well.)
Further, it should be noted that Lycanthropy reports were not usually self-administered; instead people assumed another to be a Lycanthrope based on any number of criteria, including those Lark listed but others as well, which also included a number of potential Mental-Illness conditions exhibited by the one whom people claimed was a Lycanthrope, including Antisocial Personality Disorders, Bipolar Disorders, Drug Induced States, and so forth. Something not as clinically significant as Lark mentions with several of the excess hair disorders could still be pegged as a Lyncathrope, including extra long sideburns or hair, shaggy hair, unshaven face, and so forth. A person could be accused of being a Lycanthrope for having a "Wolf-Like" face, which included a narrow face, narrow cheeks, long narrowing eyes, etc.
In other words, Lycanthropy was often an Accusation thrown about by people who didn't either understand whet they were looking at, or didn't like someone's refusal to conform to the Norms, Mores, and Taboos of the time, much as has been the case with Witches.
What's more frustrating for me, however, is that my interest in Werewolves was spawned in Traditional Literature; not some stupid Hollywood Production with fancy SFX. Kids today watch these movies and get it in their heads that it would be 'cool' to be a Werewolf or Vampire, all without either respecting the Traditions from which those movies were inspired, or without properly understanding the Nature of the Beast, as it were. If I had to guess properly, I'd say 80-90% of the people coming here with such absurd requests and ideas have never heard of the Salem Witch Trials--barring, again, Idiotic Hollywood Stereotypes--or the European Witch Hunts, or any other significant Historical event dealing with actual Witches, Werewolves, or Vampires.
What such people are looking for is a way to escape reality and their problems, and not have to face them head-on. And I don't want anyone to misunderstand me; Fantasizing is fine, within reason. My life sucks; I spend a lot of time Fantasizing about other worlds or being another person or being.
But to come on these boards and talk to and ask serious Practitioners of the Craft such things not only slaps them in the face, it is an overt declaration by the people posting these types of questions and such that like the Movies, they think Magick is Fake.
My advice, and I hope you take it to heart, is to turn off the TV and pick up a good Literary Source on these Phenomenon. Endeavor to learn the real-life roots of these stories and understand the people who speak of the History of the thing when they explain how these phenomenon came about.
I guarantee you, you'll find stories far more fascinating than what you get in cheap Hollywood junk movies.(Which reminds me; I need to still read the Witchhammer--Malleus Maleficarum--an ancient book that discussed Witches and how the Hunt them. It's a real historical book written by the people I discussed above who didn't understand what Witchcraft really was, or used it to enact Religious Gain. And yeah, the Witchhammer--Malleus Maleficarum--is straight up Religious Propaganda.)
