You'll find a way into the witch's cabin if you explore the rest of the woodland area. If you can't find the way forward in this game, the answer is almost always, "screw around and look for treasure."

Specifics under the spoiler.

Specifically, there's a hill covered in crazy traps which has a barrier-dissipating scroll - left behind by Maradino, a mage you'll be hearing plenty about.

You can also just kill the mushrooms, but that's the lame way of doing it.