Finding Witch in Red
So that rumor is only triggered with Daniel in your party.
Go to Trieste and it will trigger your first scene with Daniel, he will have you to Venice. Then go to Trieste again the month after that, you will need to go rescue Daniel.
You go to Venice tavern after and you can pick him up. After that go to Marseilles to trigger the first witch appearance. Then go to Palma across the pond to have her join.