There are some grammar/spelling/missing info issues (I think) that are making it difficult for me to understand the story. I will post what you wrote in a quote below, and post comments etc. in red within it.

I am thinking of making a horror side-scroller and I need feedback on its story. Here is a background of the story: My recommendation is that you use spacing and paragraphs to add to the readability of this.
Noliuk Pholos, the dictator normally communist governments do not refer to their leaders as dictators, just as an fyi of the Communist Produhk Union declares war on the Spiranmut Democracy. He was apointed Appointed ruler after the former ruler of the Communist Produhk Union was executed. Noliuk hatches a briliant brilliant idea to make a biological disease diseases are always biological. That seems redundant. To clarify; A disease is the condition brought about due to some physiological problem, or a contagion. Now, a contagion can be non-biological (nanites etc.), but the disease they cause is always biological. that will turn the people of Spiranmut against themselves. The labratory for the experimenting is built inthe Northern Produhk Mountains. A group of mad scientist create a disease, but it makes the host a crazy,murderous rotting monster that kills any living thing. The disease breaks out in the area around the labratory laboratory. Pholos takes the disease carry out of there and evacuates the area. When evacuating, Nicolai Kuinok who?? is shot and suposed Supposed (or do you mean "presumed") to be dead. The disease is put in poltury poultry and the sent Spiranmut what does "and the sent Spiranmut" mean?. After the disease breaks out in Spiranmut, Noliuk declares war on them.lol why?
Back in the labratory laboratory, Nicolai wakes up to the sound of something banging on a door. He was a patient in the testing of the Junski Plauge(Noliuks name for the disease, named after a crazy friend of his). When he wakes up, he is dressed in a straight jacket and boots.
That is my story at the moment. Any feedback is welcone and is greatly appreciated! If you think the idea needs improvements, or just plain sucks, please state so.

I mean this in the best way possible - as constructive criticism rather than an insult of any kind.

You have a serious number of spelling and grammar errors in just this synopsis. What this says to me is that you can't be bothered to use a spell-check (I don't know if it is because I am using google chrome or not, but my words are spell-checked as I type them into this message box.

What this tells me is that "I shouldn't be bothered to read it". I read it anyway because I wanted to help. I'm sure you are well-aware that throwing your work out there for the sharks to criticize requires thick skin. But I apologize if this is harsh; it's just my first reaction. That's not to say that we don't all make grammar errors or spelling errors, even with all the tools available to us to prevent them. I certainly have my fair share. But there is a fine line between mistakes and sloppiness.

There are a few plot points missing that would make the idea cohesive, such as motives for declaring war on the Spiranmut during the outbreak. Also, "a group of mad scientists" is an incredibly flimsy plot device (at least in my opinion). Did they meet at a crazy scientist convention? If you have to answer this question... "What was their motive" with the answer, "Because they are crazy", then you have a pretty weak section of the story-line there.

Also, you called this steampunk, but nothing you mentioned in this description would make it a steampunk story-line.

All that being said, the overarching idea isn't bad, but you have some work to do to make the idea cohesive, easier to read and critique, and stronger.

Good luck!