I think it depends on the age of the child too. Younger children live in a world filled with magic, so a lot of times, you help them find good magic to counter the bad magic. Either way, you have to work with them within the framework they understand to move them away from the fear into something better, and then from that better spot into using more reason and less magical thinking.
I think the worst thing you can do is not respect their beliefs. Even though you don't believe them, they are real to the child and saying they are nonsense doesn't make the child feel respected. Without feeling that their feelings are respected, they won't allow you to help them with, well, anything.