Moral Dilemma: What would you choose?

The following situation is at hand:
The local baron has contracted you to find his escaped wife.
During your search, you come across a small group of houses in the swamps, ruled by a trio of witches, where you not only find the baron’s wife, but also a group of orphaned children, which the witches intend to eat later.
In exchange for information important to you, the witches ask you to slay a spirit that has possessed a nearby tree, which has caused a number of deaths from a nearby village.
After talking to the possessed tree, it asks you to free it, instead of killing it. In exchange for its freedom, it promises to free the children imprisoned by the witches.

These are your choices:
1. Free the spirit.
If you do this, the children will indeed be rescued, however, the spirit now slaughters almost all the inhabitants of the nearby village.
Furthermore, when you and the baron go back to the swamps to retrieve his wife, you find her turned into a monster, and she soon dies. In response to this, the baron hangs himself at his castle.

2. You slay the spirit.
If you do this, the inhabitants of the village will not be killed.
However, when you return to the swamps with the baron, you find that the witches have eaten the children.
The baron’s wife is not turned into a monster, but suffers from extreme dementia. The Baron does not commit suicide, and instead promises to take his wife to a faraway sage.

Which do you choose? (I chose the latter.)