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There is also a NPC stood next to the cauldron where you exchange tokens for items.
During non event times the cauldron spot is a big statue
Yes. When I read the steam announcement for this event it sounded like there were 2 different ways to get the costumes that weren't connected. I didn't know I needed to do the event boss first for a chance at a costume before I could loot the baskets at chances for more. It sounded like there was a way to get a costume without having to do the boss. I've done the boss 3 times now and have yet to get a costume.
You are just not seeing it but it's there. But be prepared once you use it there is a 30 min timer. So visit every town which each will have two candy baskets. You can toss the candy but there are some 650 armor drops that you can get which are also good for Transmog. Other than the skins and maybe a few short term get upgrades you aren't missing much.
Just found 2 costumes under my utilities in my inventory. Thanks for the help!