Option A - Kill the spirit in the tree (shorter)
In the Ladies of the Woods quest you will receive an order to kill the spirit in the tree. It happens during the side quest The Whispering Hillock. It's a requirement to receive information about Ciri from the witches. You can kill the ghost earlier, before starting the main quest or during it. When you return to the Baron to receive the task of returning to the bog, you will go from Donnerwile (M9,19) to the house on the swamps (M9,17). You will fight some drowners and water hags (8-9 level) on your away and, at the end, with a fiend (level 9) - use fire to win easily. The quest ends at that point.
Consequences: After the battle a family meeting between Baron, Tamara and Anna will occur. Decision about killing the spirit in the tree makes Anna incurably sick on mind . The Baron will take her to his house. The fate of the children in the village is unknown. Citizens of Downwarren village are safe and sound.
Option B - Free the spirit in the tree (longer)
IMPORTANT - to play this option, you can't start the Whispering Hillock quest until you find the village on the swamps (M9,17).
In the quest Ladies of the Woods you will receive a task to kill the spirit in the tree in the side quest The Whispering Hillock. You must do it to receive information about Ciri from the witches. When you go to the hill and meet with the spirit, he will offer you a deal - you can challenge the witches and free the children from the village by releasing the spirit from the tree. More details on how to do it can be found in the description of the quest The Whispering Hillock. You must return to the Baron to receive the quest of returning to the swamps. You will go from the Donnerwile village (M9,19) to the house on the swamps (M9,17). You will fight some drowners and water hags (8-9 level) on your away and, at the end, with a fiend (level 9) - use fire to win easily.
After the battle you will discover that Anna has been transformed into a water hag. To remove the spell, make contact with Johny by going to his small cave. You will find some beasts at the entrance, but your little friend won't be there. The trail will lead you to him, sleeping under a shelter nearby. He will tell you about a hidden basement in one of the houses on the swamps. Go back and enter the highest building. On the right side, behind the chests, there's a hatch to the basement - walk in and go to an altar. You must select the correct doll out of four possible to save Anna. If you make a mistake, the woman will burn. Pick the doll with the violet flower.
Consequences: Anna will return to her human form but die immediately after. Baron will tell you to return to the Crow's Perch for the payment. When you arrive, you will learn that he has hanged himself. The fate of the children remains unknown - the spirit has said that they will be freed. The citizens of Donwarren are dead - killed by the released ghost.