First, you should move your CollideCallback into the OnStart function.
Then, make a new function, (Not inside the OnStart, OnEnter, or OnLeave), which should look like:
void scareactivate(string &in asParent, string &in asChild, int alState)
{
}
Then you put whatever it is you want to be activated inside those brackets.
Your finished code should look something like this:
void OnStart()
{
GiveItemFromFile("lantern", "lantern.ent");
for(int i=0;i<10;i++) GiveItemFromFile("tinderbox_"+i, "tinderbox.ent");
AddEntityCollideCallback("Player", "scaretrigger", "scareactivate", true, 1);
}
void scareactivate(string &in asParent, string &in asChild, int alState)
{
SetEntityActive("scaremonster", true);
AddEnemyPatrolNode("scaremonster", "scaremonsterpath1", 0, "");
}
Don't forget to set the monster to inactive in the level editor.