Chicago ? When William Villavaso closes his eyes, the nightmare is waiting for him – the one about the 15 hours he spent in water slick with diesel fuel in New Orleans, a life jacket and a chunk of wood keeping him afloat until he was rescued.

Six months after losing his home and his possessions to Hurricane Katrina, the 49-year-old New Orleans native is living in Chicago, where he has been diagnosed with post-traumatic stress disorder and wakes up from bad dreams in a cold sweat.

“I hope to have normalcy again in my life,” says Villavaso, who is trying to battle his depression at group counseling. “I’m just hoping for that stability.”

As many as 500,000 Katrina evacuees across the country may need mental health counseling, according to the U.S. Substance and Mental Health Services Administration. And while Villavaso is getting help, the government says many others are not, and may not even know they need it.

Several states that took in evacuees are recognizing the problem, changing their focus from providing housing and jobs to offering counseling and emotional support.

In Illinois, about 20 counselors are tracking down approximately 7,000 evacuees, and officials are referring them to professionals.

“We know that there’s several stages of emotional crisis that people go through,” says Carol Adams, Illinois’ human services secretary. “Right now, people are in the stage when they realize things won’t work out quite how they thought.”

People like 46-year-old Reginald Lucien, who like Villavaso came to Chicago from New Orleans’ devastated Ninth Ward.

“When I first came to Chicago, I thought it was easy to cope. I never questioned it,” he says. “As time goes along, I come to the realization that this is where I’ll be for some time. It gets harder. I get anxious.”

To help evacuees handle the stress, the Substance Abuse and Mental Health Services Administration and the Federal Emergency Management Agency have given states more than $67 million, including a $19.2 million grant announced this month.