I remember this place! It scared the hell out of me, too, and my dad always insisted on taking my sister and me inside. This was right around '69 or '70. I even remember some of the exhibits. There was a man being stretched on the rack, a woman dangling from chains with hooks through her breasts, and somewhere in one of the exhibits there was a Snoopy up in a tree doing his vulture imitation. We used to make the rounds and usually stopped in at either the House of Horrors or Ripley's, and then ate at this Chinese place called Tommy's. If you were ever at Tommy's and the jukebox was playing "Sugar, Sugar", my sister and I were probably one or two booths away from you, eating wonton soup and sweet and sour pork with sesame seeds. I remember some place with bay windows where a glass blower would work right there where you could watch him, and there was a little art store where my mother would stock up on Grumbacher oil paints.

Looks like there's a picture online of the House of Horrrors (maybe you posted it yourself?):

https://www.google.com/search?q=old+town+chicago+house+of+horrors&biw=1575&bih=766&source=lnms&tbm=isch&sa=X&ved=0CAYQ_AUoAWoVChMIp6aloaOuxwIVT3ySCh2wIAGv#imgrc=HsuV1bTwpkWYqM%3A