Really simple
1: Ditch Spirit Folk entirely. Give me a myth where they appear, and I might consider not throwing them to the wayside.
2: Split Hengeyokai into the various races
Kitsune: Powerful master illusionists
Tanuki: Irrelevant pranksters
Nekomata/Bakeneko: Just merge the various types of cat monsters together. Necromancer soul-stealing cats who can turn into anyone they kill. Also can turn into giant cats that can devour pretty much anything. There's yer cat people, have fun. There is no cat girl. There is entirely "Murdering a man and devouring his corpse, and then living his life"
Jurogama: Once again, merge the two types. Give them the more bandit thing of the other spider yokai
Moon Rabbits: Descendants of the rabbits who went to the moon with
Various Underwater Creatures: Honestly, if I was going to group a bunch together and just say "Grab this stat if you want", this is the one I would. You're a shark, a crab, a turtle or an oarfish who can turn into a person and comes from a magical
Namazu: You're a namazu. You're a catfish who can grow arms and legs. No human form for you. Just arms and legs. Let me have this hilarious race.
Also click for the actual, canonical voice of all Namazu
Naga: They appear in both Chinese and Indian mythology, so a no-brainer
3: Add eastern dragons/ryu/long/whatever we're calling them today as a race. You get your full powers if you have your dragon pearl, which is being kept by Ryuujin or whatever equivalent FR has so you don't go off and cause chaos and also so it doesn't get stolen