I had this on VHS in the 90’s but haven’t been able to track it down online and no longer own the tape as my parents donated a box of old ones several years back. Film was in color and all characters except for the children are either in large puppet costumes, or are actual puppets. US/Canada in origin.
Two kids, a girl and her younger brother, are on their way home and they have this necklace from their grandmother. And somehow they get sent to this weird island and meet this weird red/pink creature called Rog(or something similar sounding), and are trying to get him to a special place because he’s sick. And they meet this crazy witch who has a snake, an uncle who is just a head, and I think she might’ve had a cat too. The uncle briefly joins the kids and Rog, but rejoins his niece later on. And there is a giant on the island who is sleeping, but they manage to wake him up and he has a giant bubble wand.