Well-thought-out and moving.
A crippled fly, alive but broken and miserable forever. Yup, that's the infant Naraku.
If Osamu was a meek and honest man, then you might want to establish that he's rich before you get to the part about "finest silks" (which is a borderline cliche).
Whenever a new speaker begins a direct quote, it is best to have a new paragraph. Sometimes artistic license allows the paragraph to be joined, but I don't think you quite make it here.
"Take anything of value that you like from my home, and leave."
A classic fairy tale mistake. It still gives me chills.
Non-independent clauses that follow a coordinating conjunction (and but yet so or nor) like "and would never regain the use of his limbs," do not generally need to be preceded by a comma.
He fears Onigumo's return one year and relishes it the next, another classic fairy tale move. This is most excellent.
I think you need to make it a bit clearer that Osamu died in the fire. Also, I'm not confident that Japanese communities in the sengoku jidai had a concept of foster families.
Author\'s Response: Thanks for the constructive review. They are hard to get, so I appreciate it.Regarding foster families in the Sengoku Jidai, I don't know if that is accurate or not either, but it's been used in Inuyasha before (I believe a family takes in Koharu, and one took in Kohaku for a while), so I think it stays within the boundaries of the IY universe. Thanks again.