NEW YORK (CNS) -- Fans of M. Night Shyamalan hoping for a return to form after his so-so last outing, "The Village," will be disappointed to find "Lady in the Water" (Warner Bros.) an atmospheric but ultimately unconvincing fairy tale.

Cleveland Heep (Paul Giamatti), a former doctor who suffered tragedy, is now a sad-sack super at a suburban Philadelphia apartment building, beset with a painful stutter.

Among the multiethnic inhabitants of the Cove complex are a crossword puzzle addict dad named Mr. Dury (Jeffrey Wright), sour film and book critic Harry Farber (Bob Balaban), an aspiring writer Vick Ran (Shyamalan himself) and his sister (Sarita Choudhury), intellectual loner Mr. Leeds (Bill Irwin), bodybuilder Reggie (Freddy Rodriguez), and a Korean, Mrs. Choi (June Kyoko Lu), who speaks no English (but will be able to shed light on some of the strange happenings), and her college-age daughter Young-Soon (Cindy Cheung).

Strange nocturnal noises and other clues would seem to indicate that someone's been illegally swimming in the complex's pool at night, and when Heep attempts to investigate, he discovers a childlike young woman named Story (Bryce Dallas Howard), who has been living underneath the pool, and brings her to his apartment.

In remarkably short time, he figures out (thanks mainly to insights from the irascible Mrs. Choi) that Story is a water nymph -- in Shyamalan-speak, a "Narf" -- who has crossed over to the human side, and that Narfs can only be returned to the sea with the intercession of human "vessels" who assume the roles of Guardian, Healer and Interpreter of Signs.

Trying to prevent Story's return to the sea are several "Scrunts" (wolflike creatures who ominously circle the complex), and even worse, ferocious monkeylike creatures known collectively as the "Tartutic."

Before long, the entire community has banded together to try to help Story get back to her Blue World, paralleling an earlier mythic time when, in the story's sentimental conceit, creatures of the water and land were friends who helped each other.

Director-writer Shyamalan provides some trademark scary moments with admirably little overt violence, and the universal brotherhood theme is unarguably a noble one.

But this aquatic "E.T." retread fails to grip, despite skillful direction and solid performances. Shyamalan's casting himself in a fairly sizable role is distracting, though he's perfectly adequate.

And the character of Farber, though mildly amusing, is a bit distasteful in that he seems to be there solely to reflect Shymalan's contempt of critics. Vincent Price's horror classic, "Theater of Blood," did the same thing with more genuine wit.

The roots of the plot ostensibly came from a bedtime story Shyamalan made up for his young children. But sorry to say, the murky, if well-intentioned, "Lady in the Water" comes up mostly wet.

The film contains some scenes of intense peril and suggested nudity. The USCCB Office for Film & Broadcasting classification is A-II -- adults and adolescents. The Motion Picture Association of America rating is PG-13 -- parents strongly cautioned. Some material may be inappropriate for children under 13.