I remember tracking it pretty deep a few years back. Basically:
1. Some guy claiming to be the programmer made a long explanation about it on a big gaming forum and gave logical explanations for all of it. Several other people involved also stepped forward. Turned out they were all the same IP and a hoax.
2. I can't find it right off but there was a post somewhere explaining how the whole story seems to be a tribute to an old writer whose supernatural stories always took place in Portland, Oregon and involved the same plot staples. It appeared to be little more than a tribute rumor.
3. Someone connected that the story seemed to be based on real cases for a prototype version of Tempest that caused vertigo in its players, where the level moved instead of the ship. That much was true.
4. One spanish gaming forum I used to frequent claimed to have the real Polybius and it got pretty weird. Someone made a ROM and the other posters extracted Betty Page photos and death mask/raven paintings inside the graphics data. It seems to have also been a hoax, though.
In other words... it's fake, never existed, never will. Some people made tribute games/cabinets and it's a fun bit of the arcade mythos, but don't expect to stumble across a cab in a warehouse anytime soon.