**Core Concept**
Korsakoff's psychosis, also known as Korsakoff's syndrome, is a neurological disorder characterized by the loss of memory and learning abilities. This condition is often associated with chronic alcohol abuse and malnutrition. The underlying pathophysiology involves damage to the hippocampus and other areas of the brain responsible for memory formation.

**Why the Correct Answer is Right**
The characteristic feature of Korsakoff's psychosis is anterograde amnesia, which is the inability to form new memories. This is due to the degeneration of neurons in the hippocampus and surrounding areas, leading to impaired synaptic plasticity. The patient may also exhibit retrograde amnesia, which is the loss of memories formed before the onset of the disorder.

**Why Each Wrong Option is Incorrect**
**Option A:** Confabulation is a feature of Korsakoff's psychosis, but it is not the defining characteristic.
**Option B:** Wernicke's encephalopathy is a related condition that can progress to Korsakoff's psychosis, but it is not a feature of the latter.
**Option C:** Hallucinations are not a typical feature of Korsakoff's psychosis.

**Clinical Pearl / High-Yield Fact**
A key clinical feature of Korsakoff's psychosis is the patient's inability to form new memories, which can be demonstrated by asking them to recall a series of words or events. This can be contrasted with confabulation, where the patient fills in gaps in their memory with fabricated information.

**Correct Answer:** C. Hallucinations are not a typical feature of Korsakoff's psychosis.