The Point Lookout Witch is said to be located in the location of the Point Lookout DLC for Fallout 3, Point Lookout. The whole area is mostly swampland which already is enough to make it creepy.
The myth started when players discovered dozens of voodoo dolls hanging from trees in numerous areas of the map. Witches have been known in folklore to use voodoo dolls to torture their victims. The rumours spread about the myth are that she (or they) is roaming around the swampland using voodoo and other spells against the local populace.
Many theorize that the dolls were placed by the local swamp people, but believers in the Witch argue that they are just cannibals and would have no interest in using voodoo.
There is a large cave system northwest of the Jet crash site, that features a large amount of skeletons and various voodoo dolls and witchcraft related structures. It is possible that this is the home of the Witch or, at least, another murderous hermit.
Even though her presence is probable, there isn't any physical evidence that she actually exists.