It may be a bug, from what I remember you walked up to the flame and text appeared giving you the option to activate the flame when you were close to it. Activating the flame asked you if you wanted to cast the witches head into the flame. Other than having the head in your inventory and pressing A when given the option while your next to the flame there isn't anything you have to do to prompt it. I don't really have a fix other than loading an earlier save, perhaps someone else could be of more help though.