The Witch's Island is a area only accessible from the Traincar, itself only accessible from the Dense woods The Witch effect can be obtained from here.
To get here, Madotsuki must trigger an event from the traincar. Upon entering the area you'll see many Nopperabou Witches. Down the bottom, you'll find the start of the boardwalk. This stretches for several screens with many interesting formations in the water. On the other side is the Witch's island and a red-eyed Kimajo.
If Madotsuki interacts with Kimajo, she will get the Witch effect.