The Search Continues

Okay folks, here's the deal: My buddy Scott and I are looking for a horror novel. He lent it to me many, many years ago and neither of us can remember what in the hell it's called. We've been in communication about it and we certainly remember the dang plot but as for author and title, well... No dice. I think the book is British from the early 80s. Here's what I've got:

All I can remember is that there was a group of people who were infected with some kind of disease or possessed by some kind of force that made them extremely violent and I think bloodthirsty as well. They go from house to house in this small town killing and turning everyone into creatures like themselves. I think they're eyes turn red and they become extremely powerful. Some folks rise up to combat these ghouls and I believe the book ends very abruptly.

Here's what Scott remembers (some spoilers):

I think it was the first zombie/infected book I ever read. I was wondering why they never tried to make it into a movie; it had potential. I think the infection started by touching a watch or some other jewelry, and it started with a severe headache. It ended with the local police finding all the infected holed up in a movie theater, and then burning it down. I believe a kid was re-infected in the last paragraph.

I ran this by Will at the great Too Much Horror Fiction blog and he suggested it might be The Fog by James Herbert. I've confirmed that this isn't the one but looks like a friggin' great book anyway. So the search continues. In any of you can remember or locate the title and author of this book, I'll give you a (crappy) prize. If you know of an archive of 80s and/or British horror novels I could go scrounging around in, that would be very helpful as well.