Wow…This story is quite confusing. To me, it seems that there is an Erl-King in the woods and some girl is obsessed with him. The Erl-King seems to be some half man, half animal type of guy just like in the other stories in the Bloody Chamber. Well, the girl in the story knows that this guy causes great harm to people with his “love-bites” and stuff like that. The girl is not affected by any of this because she “loves him with all her heart”. Wow, talk about crazy! So, continuing on, the Erl-King collects souls from his “love-bites”.
The fiddle, to me anyways, seems to be the idea of being “human” or back to normal at least. During the story, the fiddle is broken and then the girl contemplates “fixing it”. Maybe that means that she wants to change the Erl-King into a human again. I have no idea if this is right, but this is my opinion on this whole situation.
