Roberto Bolaño has been dead since 2003, but he remains the planet's most prolific novelist. Every six months, it seems, we are gifted a fresh masterpiece, or near miss, by the Chilean wizard, who, after a well-spent youth (drugs, global wandering, political struggle), finally settled down in early middle age to pass his last decade on earth (he died from liver failure at the age of 50) augmenting world literature.

That the anglophone world should experience Bolaño's oeuvre as a posthumous phenomenon is entirely appropriate, for his books are all about the obscure spell cast by the dead over the living. In a mordantly representative moment from one of his stories, a man and a woman are sitting in a restaurant leafing through a decades-old, long-since-defunct literary magazine. On the last page are printed the names of contributors to the forthcoming issue  Jean-Jacques Abrahams, Pierrette Berthoud, Sylvano Bussotti, William Burroughs  which the woman reads aloud "with a mocking smile". The man sits there in silence. "They're all dead," he thinks to himself.

Written in 1989, shortly after Bolaño had settled in the Spanish resort town of Blanes, and unpublished in the author's lifetime, The Third Reich was recently discovered at the bottom of a drawer  which, at first glance, would seem to be the ideal place for it. The novel represents one of the author's first goes at fiction, and it clunks and sputters with all the awkwardness you would expect from an apprentice work. At least part of this awkwardness can be laid at the door of our narrator, Udo Berger, a 25-year-old German who, together with his statuesque girlfriend, Ingeborg, is spending the last weeks of summer in a Costa Brava resort town.

Lofty, irascible and single-minded, Udo has the temperament of an artist, though his vocation is rather less exalted. He is a gamer, which is to say he plays grand strategy war games  like Risk, apparently, only much more complicated  and he takes it all very seriously. Not only has he recently gone "semipro", he is also the national champion, a fact of which he likes to remind us, and  we quickly get the feeling  himself.

Like many narrators before him, Udo has just decided to begin keeping a diary ("the urge to write, to set down the events of the day, keeps me from getting into bed and turning out the light"), a practice he sticks to for the next 270-odd pages. "I don't think it's an exaggeration to say that my life has never been better," Udo writes, with ominous complacency, in his first entry.

Trouble arrives the very next day, in the form of Hanna and Charly, another pair of young Teutonic holidaymakers, whom Udo and Ingeborg quickly fall in with. Through their new friends, they are introduced to some of the seedier denizens of the town, a pair of beach bums known only as the Wolf and the Lamb, and El Quemado, "the Burns Victim", the proprietor of a pedal-boat rental business, whose hideously scarred face, a bit like the severed ear at the start of Blue Velvet, is one of the first signs we get that this apparently idyllic seaside setting is in fact a writhing snake pit of violence and deceit.

Charly, an erratic misogynist who likes his drink, is the character who does most to fuel the engine of plot. One day, in an event that is rather laboriously foreshadowed, he goes windsurfing and doesn't return. Days pass. Hanna, overcome with grief, goes home to Germany. Then Ingeborg does the same. For some reason, Udo decides to stay put. It seems he is unable to leave until Charly's body is washed up, but why this should be isn't clear. Leaving the motive opaque, Bolaño allows a disquieting ambiguity to seep into his narrative.

From here on in  and we are still not yet halfway through  the book rations incident almost to the point of starvation. As in a film by Antonioni, what we are left with  what we are forced to get by on  is atmosphere, pages and pages of the stuff. Udo loiters on the beach, flirts with the hotel manager, and starts playing a wargame called Third Reich with El Quemado. Although Bolaño milks some unexpected comedy from Udo's geekish fanaticism  "my movements in the East and the Balkans (after the classic play: the obliteration of Yugoslavia and Greece) make him fear an impending invasion of the Soviet Union"  the game never quite reverberates with the menace Bolaño seems to have intended.

Nevertheless, it is in its second half that the book starts to repay our attention. With passages that anticipate the dark, chaotic splendour of By Night in Chile, Udo's diary becomes a record of moral and psychological disintegration, swarming with toxic hallucinations and poignant non sequiturs. Something hidden from us, something hidden from Udo himself, seems to be hollowing him out.

Near the end, holed up in his hotel room, he speaks on the phone to his friend and war games mentor, Conrad, who is trying to understand why Udo doesn't come home. "'Did you get a letter from me?' Udo asks. 'I think I explained everything in it.'

'All I've gotten are two postcards, Udo. One of the hotels on the beach and another of a mountain.'

'A mountain?'

'Yes.'

'A mountain by the sea?'

'I don't know! All you can see is the mountain and a kind of monastery in ruins.'

'Anyway, you'll get it. The postal system is terrible here.'

Suddenly I realised that I hadn't written any letter to Conrad."

Auden, in his elegy for Yeats, describes the death of the poet being kept from his poems. The lavish packaging of the Chilean Roberto Bolaño's novel The Third Reich goes further, by keeping the death of the author from his readers. The slipcase calls it "Bolaño's first novel since the epic 2666", as if 2666 wasn't itself posthumously published. This is an odd decision, since Bolaño's death (from liver failure in 2003 at the age of 50) is an active part of his legend. Bolaño's death with his magnum opus so nearly complete is a strong mythic pattern (not to mention a publicist's dream), the cheated glimpse of fulfilment echoing not only Proust but Moses.

Nowhere is it acknowledged either inside or outside the book that The Third Reich is a relatively early work, dating from before 1990, to judge by the reference to a divided Germany. It would be useful to know if this rather overcontrolled study in loss of control was held back by the author or rejected by publishers  Bolaño thought of himself as essentially a poet but turned to fiction when he needed to support a family. It takes the form of a diary kept by Udo Berger, a 25-year-old war-games hobbyist from Stuttgart holidaying in Spain with his girlfriend Ingeborg. He avoids the beach and the sun, going out to clubs as little as possible, and spends most of his time working on an article about strategy in one particular game, "The Third Reich".

It seems to be a general rule that any effort to exempt art from history makes it all the more vulnerable. Fantasy weatherproofing only magnifies the erosive effects of the elements. Any innocent reader is likely to be baffled by the book, which wasn't written as a historical novel but has become one. The absence of electronic media dates it, not only in the reliance on landline phones but in the physicality of the game itself, a board with counters for troops, relying on the throw of a dice (of all primitive mechanisms) to generate moves.

The ironies are laid out like so many counters on the board of the narrative. A central character who turns a game into work (his actual job is with the electric company), and a holiday into an obsessive retreat from company. A compulsive player of war games with no understanding of conflict in the real world. A German who regards himself as the opposite of a Nazi but obsessively restages the second world war to improve on its outcome.

One of Udo's fellow players, Heimito Gerhardt, has the distinction of being a veteran (he was in the 352nd infantry division) of the war he spends his time recreating. This creepy information would have more impact if the reader wasn't busy using Gerhardt's age, 65, to work out the year of the book's setting. Alongside all the intended ironies are ones which the author couldn't have predicted at the time of writing  it's hard to screen out the associations which have attached themselves to the celebration of Catalonia Day on 11 September.

Bolaño lived and had unglamorous jobs in Spanish resort towns like the one in the book, although the symbolic weightings are standard. Germany represents an excess of order, Spain an insufficiency. A rogue element is the presence of a hirer of pedal boats, bearing the marks of extensive burns and consequently called El Quemado, whose arrangement of his vehicles on the sand at night strikes Udo as disturbingly irrational, "though Spain is hardly a regimented country". El Quemado turns out to come from South America, and his burns are obscurely significant.

The Third Reich is a sort of tentative gothic. There are sinister dreams, retold in great detail, mirrors that seem to give Udo no reflection, voices that come from everywhere and nowhere, and "a silent zone (with raw staring eyes)" surreptitiously establishing itself in the middle of a room. Yet these hints come to nothing. Clearly Udo is an unreliable narrator, but Bolaño holds back from having him collapse into madness, keeping alive the possibility that he's growing up, or at least growing out of being a dull nerd.

It's not clear that anyone short of an expert could identify the book, neutrally well managed as it is, as Bolaño's work. It's true that there's a reference to Ernst Jünger, who was an emblematic figure for Bolaño, though it's hard to be sure what of. Jünger (1895-1998) was a hero of the first war who had an ambiguous relationship with Nazism, keeping a distance but not taking obvious risks. For Bolaño he might represent the possibility of steering a way through the tides of history, or more likely the futility of imagining you can do any such thing.

A more productive influence on Bolaño, the Austrian Thomas Bernhard, isn't a presence here, though his example went a long way to making possible at least one book of Bolaño's  in which Jünger actually appears  the great novella By Night in Chile (2000, translated 2003). Bernhard favoured not just the long sentence but the infinite paragraph, the book-length block of unbroken prose. It seems a trivial device, and it's not a reader-friendly one, since it works by refusing any possibility of perspective, of pausing within the book to reassess its elements. You can put the book down, of course, but that's a different operation. Bernhard himself was a maddeningly repetitive writer, but Bolaño saw that you could use the same device to impose unity on the most perversely various material, as he did in By Night in Chile. Ignore the suggestion on the slipcase of The Third Reich that it's "the perfect way to discover" Bolaño and start there.