The Puppet couldn't save them. It saw what was happening. It wanted to stop the Purple Man, it might have been able to get out of the box, but there was too much of Brendon still in it. Too much of a frightened child whose first instinct to seeing something scary was to hide.
The Puppet sensed as the Purple Man grabbed the smallest child, named Robbie, and used him to manipulate the other children. There was horror and fear. It sensed the older brother wanted to help him, but completely helpless to do so, only keeping Robbie safe for a few moments while he took the pain that the Purple Man inflicted on him. The Puppet sensed as Peter tried to run away, only to be stopped by the Purple Man, and his body battered, his spirit clinging to the inanimate husk that remained. It sensed as Lucy and Greg cowered in the corner until Will's strength gave out, and the Purple Man turned to them. But above all, the Puppet sensed Robbie. The Puppet sensed Robbie's shock at the realization that Freddy was a fake, Robbie's guilt tearing him into pieces at leading his brother and his friends into this and being too weak to run away or fight back, and his pain. This hurt was the last thing all of the children felt. The Purple Man left, his rank spirit elated and achieving some kind of perverted peace. The children though, were left crying on the floor. Their bodies were too damaged for their spirits to remain, but their agony was still too great for them to move on. They were wisps of smoke without a candle to hold them. Without a vessel, they would only remain smoldering.
Brendon's spirit was not happy as the Puppet. There was nothing from his old life apart from a name, and a few memories, most of them not good. Still though, it could not leave the children's spirits like this with only their agony.