The Witch Toy can be found in the barracks section of the forest, where you need to climb up some buildings to use a cannon. Off to the side of this area is a small path you can follow around the side of a mountain to reach a small room with a locked collectible. You need to throw your shield at a chain in the room, which will reveal a shield switch for you to throw it at. With the shield in the switch, grab the collectible from the middle of the room.