I went to school just up the road from Monkey Island and we regularly used to spend hours after school playing in the woodland.
Perhaps, it is best to expain what 'Monkey Island' is.
It is a rock formation found in a small valley in the middle of Childwall Woods. It is called an 'island' because it is surrounded by deep gullys (about 8-9 feet) that regularly get very muddy and so it can be hard to get to after some rain. The idea of the 'island' was made even more pronounced by 'The Moat', basically a sunken access road cut out of the rock that skirted the outside of the woodland. I've attached a Google Earth Photo:
here
The location of monley island always reminded me of a 'dell' or 'glen'. It was quite easy to see part of monkey island but difficult to get to as the rhodedendron bushes that cover the woodland were very dense.
I do not recall any 'satanic drawings' or indeed much carving of the rock (sandstone) apart from the usual 'JON MAC DID JEN SMITH HERE' type stuff.
As for the fires... well. I think they were probably local kids just having a laugh. In our reckless youth we quite often used to make camp-fires in the woods, never big or dangerous ones but enough to leave char-marks on the ground. I know we were naughty but it was quite fun to sit around a fire and just chill.
Another theory of mine is that the woods were used for a long time by the local goth community - well, proto goths - I.E. the kids in school who would get beaten up if they hung around outside the shops with the other kids. So they hung around in the woods. I knew some of these guys and they were not at all Satanists, just normal imaginitive youths with a perchant for black.
Easy to see how the stories start really.
EDIT: I have gone wrong with the location of the left-hand side part of the moat. It doesn't curve up it continued straight along behind the houses. Not important I know, but I didn't want somone shouting at me!