Don’t capitalize north when it refers to a compass direction. (You’d capitalize it when referring to a region, but that’s another matter: “Head about four hundred miles west of here, and you’ll find yourself in Bugs Bunny’s favorite city in the West.”)
The first and second sentences in this example are run together with a comma (comma splice). Replace the comma after Penny’s Rock with a period.
Add a comma after woods. (No, this is not an example of an Oxford comma, so you don’t get to use “I hate the Oxford comma!” as a reason not to use a comma here.) Not all compound sentences have only two parts; some have three (or more). This sentence could be broken into three simple sentences (with you, unwritten in the first two, the subject of all three imperative sentences): (You) Turn right after the windmill. (You) Head on through the woods. You should find Werewolf Village easily. Thus, you need a comma to separate one part of the compound sentence from the next.
(It has come to my attention yet again that there are idjits on the internet telling people that a compound sentence should not have a comma if the conjunction is and or but. This is incorrect. No, it doesn’t matter what style guide you follow, because they all say the same thing: use a comma in a compound sentence. Full stop. No if the conjunction is such-and-such qualifiers or conditionals.)
Capitalize Village because it appears to be part of the proper name of the place.
Add a comma after easily (separate the direct address sir from the rest of the sentence).
“If you walk about two miles north, you’ll pass Penny’s Rock. Turn right after the windmill, head on through the woods, and you should find Werewolf Village easily, sir.”