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How would I change the collectable from a 3d model to a 2d sprite?

Draw it with draw_mode7sprite (one of the engine's scripts). The obj_antagonist draws itself that way, so you could just copy its drawing code:

d3d_set_lighting(false)
draw_set_color(c_white)
draw_mode7sprite(spr_antagonist,0,x,y,z)
setup_game_fog()
(Keep in mind that it assumes the sprite's origin is in the bottom center when aligning it to the 3D world)
(+1)

Thanks yal, Your kit is amazing! I'd love a Horror Engine: Escape. basically granny except simplified.