Francis Zach Morgan

Zach is Francis York Morgan's closest and most reliable friend, despite the fact that he is seemingly all in York's head. York constantly talks out loud to his "invisible friend" during his asides and reviews, as well as chatting with him idly during their off time. While Zach is never heard responding, York apparently does hear his replies. Zach is always there to help in any way he possibly can, often being the one that York goes over evidence with.

It is clear that Zach is not a physical manifestation (at least not one that the player can see) but it is initially unclear whether Zach is some kind of psychosis, a Twin Peaks reference (as Dale Cooper narrates his life into his beloved tape recorder, Diane) or just a narrative device for the story. Eventually, Zach's true nature is revealed.

History
Zach and York have been friends ever since a particular disturbing incident during York's childhood, when Zach came to console the grieving York who had witnessed the murder of his mother at the hands of his father. Ever since that day, Zach had always been there for York, helping him and keeping him company, and the two shared such a close bond they became the best of friends, despite the bizarreness of their relationship. York continued to keep Zach close to him into his days as an agent, where Zach was more than willing to help York on all of his investigations.

As York trekked through the mystery involving the Greenvale murders, Zach was there as he normally was, providing York with company and a second opinion. Their friendship also remains unbroken despite both of them falling in love with Emily Wyatt, though Zach steps back because of his unusual situation, and instead tries to help York work out the courage to court her, and listens to York in his discussions of his affection. Zach is also there when York finally solved the crime, putting George Woodman's reign of terror to an end.

Towards the end of the game, Zach and York find out the true mastermind behind the events that shattered their childhood, Forrest Kaysen, a demonic entity that not only forced York's father to kill his mother to spare her from the red tree growing within her, but he also was behind George's descent into madness. This revelation also comes with the startling realization that York was the imaginary friend, not Zach.

York approached Zach in his time of need, swapping places with him and allowing Zach to recover in the Red Room locked deep within his mind. As they grew, they both forgot this detail, and Zach was more than happy to spend his days within the confines of their psyche. However, after this realization, Zach finds himself forcefully put back in charge of his body, with York resuming the supporting role.

Zach is forced to fight Kaysen in a one on one battle, eventually overcoming the demonic entity with his determination and marksmanship, putting an end to the mystery once and for all. In the aftermath, Zach finds himself saddened by the loss of Emily, who died at Kaysen's hands, as well as his best friend, York, who leaves him to be with Emily and to teach Zach that he no longer needs York to survive. While Zach is saddened, he cheerfully accepts York's judgment and leaves Greenvale to live his own life, leaving the souls of York, Emily, and the other victims in Greenvale, promising to come visit them again.

Speculation
The exact nature of Zach may never be entirely clear, but when the York personality is finally put to rest and allows the Zach personality back out, he changes physical appearance and all of the citizens of Greenvale instinctively know to call him Francis Zach Morgan, or Zach. Also, throughout the game, different townspeople have commented on York's scar, which is admittedly not very large, but Zach has a very large, prominent facial scar. This may indicate that the townspeople of Greenvale have known Francis Zach Morgan all along, possibly instead of Agent York, and that the green-eyed version of Francis Morgan seen throughout the majority of the game was his own self-image and not reality.

Theory on Zach's Psyche - Otherworld

 * 1. The Otherworld segments were all in York/Zach's mind, including the part with Emily. You see, he was developing feelings for Emily, so in a reversed "knight in shining armor" role, York imagined her fighting through his darkest thoughts to save him. In reality, all she did was run up the clock tower and fight Thomas. Emily never says anything about the Otherworld to anyone, so it's possible that she didn't experience it.
 * 2. George's and Kaysen's demon forms were just York's mind at work as well, he was giving the criminals he pursued a monstrous image to match their cruel and twisted intentions. One desired to be a god, one was just there to spread chaos and disorder.
 * 3. The Red Seeds themselves seem to have some sort of slight pain nullifying effects, as can be seen with Diane and Carol, they don't really seem to be in pain. Let's not forget George, who ingested a huge amount of the seeds and then only became vulnerable when shot at the weakest point on his body - his scar tissue.
 * 4. The Red Seeds and the Purple Fog were part of a military test in the 1950's, and Kaysen is shown to be a soldier there at the time. Since he too was exposed to the fog directly, not to mention being involved in the project and seeming to love every moment of it, this motivates him to do what he can with the research and spread his chaos about the country. Hence the other murders involving the Red Seeds. The reason the townsfolk at the end finally snap for a while is because Kaysen let out more of the fog into the town beyond what comes up from the ground when it rains.
 * 5. The White Rooms and Red Rooms were York/Zach's memories mixing with his thoughts of the case, as well as a few characters he saw coming ahead of time causing a sense of déjà vu.

The basics of this theory is that there were no demons or Otherworld, it was just York/Zach's mind at work. It is evident that he has some severe suppressed issues and parts of the case while he was searching for evidence just drew them out. The only real world enemies in this game were George, Kaysen, and Thomas.

Trivia

 * Zach seems to possess Heterochromia iridum, a condition in which he possesses different coloration of his iris and hair.