I remember watching this movie as a kid. There was a short magic creature/guy, that helps some kids. I can only remember that near the end the short weird guy goes to sleep.rest in a cave or tomb or something. This move was not animated, and I think the thing was possibly a puppet, costume, or animatronic. He talked, and maybe wore a cape and had pointy ears too. These are the only details I can seriously remember and I can't find clues anywhere. Was a family/kid movie.

If there was a pirate ship it was the goonies... from what I think

A Gnome Named Gnorm was one where the gnome helped the cops, I don't remember any kids though

A magic creature that helps
A group of kids

Wild guess,.

5 Children and It

I think you may be talking about Munchie! He doesn't wear a cape though and I don't remember much where he sleeps. I had been looking for this same movie for years and just came across it recently. Hope I helped. :-)