Silent Hill Wiki said:
The Wooden Plank is the first weapon James Sunderland is able to use in Silent Hill 2. It is found in the archway at the end of Vachss Road, acquired by James automatically in order to confront a Lying Figure.
It is the weakest weapon in the game; its reach is limited and it only causes a small amount of damage against monsters; however, it is a quick weapon and can be relied upon to dispatch most monsters until James finds the Pipe. It is the only one-handed weapon in the game and as such, James can swing it much faster than any other melee weapon in the game.
Some have speculated that James' one handed wielding is a glitch; however, it is more likely that it was intended by game developers. While wielding it and using auto target (PC), James will enter a wild swinging frenzy that dispatches most foes with ease. It is this characteristic that makes the Wooden Plank one of the most useful weapons, despite its low damage.
I guess the dancing around and enemy is a PC only feature. :<
That'd explain why I never managed it in any of my runs.