Very good, cannot wait to see the next episode
This is an exceptional point and click adventure game. It is unfortunate that you had to cut the game short due to size constraints. However, if you are outputting this quality work, they might be able to make an exception for you. I have seen entries that are far inferior that were 15+ Megs. However, I don't know who you would need to talk to, I only know that it can be done.
As for the game, the overlay does not really go with the music. While it is a great overlay for old and scary games, the music and gameplay do not really coincide with the overall theme. The music is too pristine and bouncy to be of any contribution (think of off-keyed and slower tempo clown music), and there is nothing in the gameplay that would give you the shivers. The jack-o-lantern gave me the impression that you were trying to make a scary game. With traditional point and click games, there are two basic options, jump and and scare and the classic thats just wrong scary. This is a more of an adventure game than a scary game, but it is still one of the better point and click games that I have played.
Also, the font is a little hard to read. Especially the one in red. Maybe a border can be added? The choices you have are also hard to figure out. The dark red/light red scheme is difficult to see. A better choice would be completely changing the color when the mouse hovers over a choice. Spacing them out a little more can also achieve this goal.