I honestly couldn't get past the premise. Luigi's Mansion showed us a Mario horror game could work, as long as it embraced the fact that Mario and Luigi are inherently funny, and tried not to be too grim and disturbing for its own good. I can tell it's a Mario game that feels ashamed to be a Mario game when the titular character sticks out like a sore thumb, barely acts like how he does in the franchise, feels almost superfluous, and yet is expected to be taken dead seriously.
I think you could've taken two different paths with this game and I would've liked it better:
Option 1: Get rid of all the Mario content and rewrite them into original characters. Just make it "The Music Box", so it could stand on its own two feet, with all of its horror intact, without having to resort to unnecessary star power.
Option 2: Embrace the Mario content. Have the flying off the screen death animations. Have the side cast be Goombas, Yoshis, Toads, etc. Get the Boos involved somehow because this is a ghost story. And play the concept of "Mario in a horror game!" for humor.
At least the art style's good, that's a bonus.