Is it permissible to include a witch character in a fictional horror mobile game—given that her face and body are not fully visible—knowing that she is a vile character depicted in a negative light to the player, and the game contains no music or images of animate beings, is directed at adults, and aims to increase Arab interest in Arab games to divert youth from infidel games that contain forbidden elements?

If the character of the magician in the game glorifies the actions of sorcerers and approves of them, then it is forbidden. However, if it deters from magic and clarifies its danger and condemns it, then it is permissible.

The depiction mentioned in the question neither glorifies magic nor deters from it. And merely having a bad magician character is not considered a deterrent. Therefore, it is preferable to avoid this depiction, lest players become accustomed to seeing such characters.