The Halloween observance originated with the Celtic Druids around
700 B.C. The Druids believed that the souls of the dead returned
to inhabit the bodies of the living on October 31st . Villagers
donned masks and costumes and paraded to the outskirts of their
towns to trick roving spirits into leaving.
Later, October 31st was incorporated into the Christian calendar as All Hallow’s Eve, honouring all martyrs and saints. Children wearing costumes offered to fast for departed souls in exchange for money or an offering. Irish Catholics fleeing from the potato famine in the 1840s introduced the Halloween observance to the United States, including the practice of carving jack-o’lanterns. At that time, the favourite pranks included tipping over outhouses whilst someone was in it! and unhinging fence gates.
The word itself, "Halloween," actually has its origins in the Christian Church. It comes from a contracted corruption of All Hallows Eve. November 1, "All Hollows Day" (or "All Saints Day"), is a Christian day of observance in honour of saints.
Some accounts tell of how the Celts would burn someone at the stake who was thought to have already been possessed, as sort of a lesson to the spirits this is open to speculation however as other historical references refute this as rubbish.
The Romans adopted the Celtic practices as their own. But in the first century AD, Samhain was assimilated into celebrations of some of the other Roman traditions that took place in October, such as their day to honour Pomona, the Roman goddess of fruit and trees. The symbol of Pomona is the apple, which might explain the origin of our modern tradition of bobbing for apples on Halloween.
The thrust of the practices also changed over time to become more ritualized. As belief in spirit possession waned, the practice of dressing up like hobgoblins, ghosts, and witches took on a more ceremonial role.
The custom of trick-or-treating is thought to have originated not with the Irish Celts, but with a ninth-century European custom called souling. On 2nd November, All Souls Day, early Christians would walk from village to village begging for "soul cakes," made out of square pieces of bread with currants. The more soul cakes the beggars would receive, the more prayers they would promise to say on behalf of the dead relatives of the donors. At the time, it was believed that the dead remained in limbo for a time after death, and that prayer, even by strangers, could expedite a soul's passage to heaven.
The Jack-o-lantern custom comes from Irish folklore. As the tale is told, a man named Jack, who was notorious as a drunkard and trickster, tricked Satan into climbing a tree. Jack then carved an image of a cross in the tree's trunk, trapping the devil up the tree. Jack made a deal with the devil that, if he would never tempt him again, he would promise to let him down the tree. According to the folk tale, after Jack died, he was denied entrance to Heaven because of his evil ways, but he was also denied access to Hell because he had tricked the devil. Instead, the devil gave him a single ember to light his way through the frigid darkness. The ember was placed inside a hollowed-out turnip to keep it glowing longer.
The Irish used turnips as their "Jack's lanterns" originally. But when the immigrants came to America, they found that pumpkins were far more plentiful than turnips. So the Jack-O-Lantern in America was a hollowed-out pumpkin, lit with an ember. Further details are available from this site
So, although some cults may have adopted Halloween as their favourite holiday, the day itself did not grow out of evil practices. It grew out of the rituals of Celts celebrating a new year, and out of Medieval prayer rituals of Europeans. And today, even many churches have Halloween parties or pumpkin carving events for the kids.
A Festival in the Roman Catholic Church, held on 2 November (following All Saints’ Day) in the conviction that through prayer and self-denial the faithful can hasten the deliverance of souls expiating their sins in purgatory. It was instituted by Odilo in the monastery of Cluny (France) 998. The day is also observed by sections of the Anglican Church.