This happened in a remote village called Sierra Morena,  t. There were three siblings named : Camila, Antonio and Julian.

"named" means that you're about to explain in the sentence itself, while a colon is more implying the list is coming after but separate to the sentence.

One day they decided to go to a witch's house, t. They wanted know if the which had hidden a great treasure.

For clauses this separate, it's better to just have them in a different sentence.

When they arrived, Camila sayid to her  brothers: “ I don't think that's a good idea, the whitch could catch us".

Julian replies (to her) " if you're afraid, turn back right now".

If you're specifying who the reply went to, you also need to put a "to" there. Since it's implied here, you can omit the "to her" entirely here though.

She thought wisely "okOk, I'd rather be a coward than be killed by a witch".

The others brothers entered the house when the whitch was outside, then they quickly searcherd for the treasure but found nothing.

It's more natural to include the "then" for this kind of clause A, clause B sequence.

Antonio say to Julian it's time to go  back home, but heJulian replies " yYou are a coward, we've almost found it."

"Antonio" and "Julian" are both "he" here, so it's a little clearer to repeat the name of the person replying to avoid ambiguity.

There was a large drawer with a padlock and Julian smiled and said: "we found it!", w. When they opened it, (oh) what a surprise!,

This kind of interjection comes across a little old fashioned.

There was a skeleton whith a note that read: " hJi boys!, welcome to my home",.  tThey screamed loudly when the whitch suddenly appeared whith a machete, t. They had no escape and began to pray.

Again, you have different thoughts going on in these sentences so it's better to have them as seperate sentences.

Suddenly a gunshot rang out, it was his sister that who had killed the which, t. They thanked her through tears, returned home, and learned not to be greedy.

This happened iIn a remote village callnamed Sierra Morena,  there were three siblings named : Camila, Antonio, and Julian.

One day, they decided to go to a witch's house, t. They wanted to know if the whitch had hidden a great treasure.

When they arrived, Camila sayid to her  brothers:, “ I don't think that'it’s a good idea, the whitch couldwill catch us".”

Julian replies her " id to her,” If you're afraid, turn back right now".”

She though wisely "okt, "OK. I'd rather be a coward than be killed by a witch".”

The others brothers entered the house whenre the whitch was waiting outside, t. They quickly searcherd for the treasure, but found nothing.

Antonio sayid to Julian it', “It’s time to go  back home, but h.” He replies " yd, "You are a coward; we've almost been found itby the witch.

There was a large drawer with a padlock and Julian smiled and said: "we, “I found it!", w” When they opened it, ohthere was a surprise!,.

There was a skeleton whith a note that read: " hi boys!, w“Welcome to my home",  t.” They screamed loudly when the whitch suddenly appeared whith a machete, t. They had no escape and began to pray.

Suddenly, a gunshot rang out, i. It was histheir sister that who had killed the which, titch. They thanked her through tears, returned home, and learned not to be greedyand returned home.

This happened in a remote village called Sierra Morena,  t. There were three siblings named : Camila, Antonio and Julian.

One day they decided to go to a witch's house, because they wanted know if the whitch had hidden a great treasure.

When they arrived, Camila sayid to her  brothers:, “ I don't think that's a good idea, the whitch could catch us".

It's conventional to use commas before dialogue.

Julian replies her " id, "If you're afraid, turn back right now".

Changed to past tense to make it consistent with the previous sentences, but it's possible to use present tense (Julian says) if it's consistent throughout.

She thought, wisely, "okOkay, I'd rather be a coward than be killed by a witch".

It's also common to separate adverbs that come after verbs with a comma

The others brothers entered the house when the whitch was outside, t. They quickly searcherd for the treasure but found nothing.

Antonio sayid to Julian that it's time to go  back home, but he replies " yd, "You are a coward w. We've almost found it."

Making sure the keep the sentences separated with punctuation in the dialogue.

There was a large drawer with a padlock and. Julian smiled and said:, "wEe found it!", w When they opened it, ohthere was a surprise!,

Splitting a run-on sentence.

There was a skeleton whith a note that read: " hHi boys!, w Welcome to my home",  t. They screamed loudly when the whitch suddenly appeared whith a machete, t. They had no escape and began to pray.

Suddenly a gunshot rang out, i. It was his sister that who had killed the which, titch. They thanked her through tears, returned home, and learned not to be greedy.

You can use either "sister who had" or "sister that had", but not both "that" and "who". For people, "who" is more common.