Now I think you just need to mess around with the position of the root nodes. Figure out which part of each root node is the origin aka position (0,0), and move the parts around while keeping the origin at position (0,0). This is the part I'm even less experienced with, but I think some nodes have the origin on the top left corner of the node (probably KinematicBody2D), and others such as Sprites might have the origin at the center. Also, I think tiles are center, but I'm not sure.
So you basically just need to move the contents around until it looks right. I think the easy way might be to simply change the Y offset of the torch sprite (to about -10) and then shift the children nodes that amount as well. But I never tried this myself, so I can't know if that will work. But the other option is to add a Node2D as the parent of the torch Sprite, and simply change the position of the Sprite, and this way the children will move as well (unlike with offset).
But yeah, then you're basically done!