It sounds like she is a girl with a great deal of imagination. She loves making up stories. This is a good thing. Encourage it!
I have an extremely active imagination. It made me afraid of so many things. I imagined monsters under the bed and in the closet. Things lurked in every shadow. Every movement of the trees, ever sound that I couldn't identify became transformed in my mind to something dangerous.
Eventually I taught myself how to harness the power of my imagination deliberately to protect myself. I remember vividly the day when I felt I had finally conquered my fears. I was thirteen years old. I walked out into the neighbor's orchard after dark, by myself, a thing that I knew would terrify me, and I made up a story. I was a person with magic inside me. I was hunting monsters. If any of them jumped out I was going to disintegrate them. It sounds childish to an adult, but it worked. I did that every night for a week, spending an hour walking through the trees in the dark, hunting monsters. Soon, the darkness became transformed for me. It became a place where I could feel powerful, not powerless.
Help your daughter learn how to harness the power of her imagination to protect herself. Reading books that other people have written is a wonderful social activity and it will add grist to the mill of her imagination, but what she needs to do is practice writing her own.
Here is a suggestion as to how you might help her.
Ask her if she would like to write a story with you. Start out with your protagonist. Make it a girl who she can identify with. Let her guide you; sometimes kids want to give protagonists their own names, sometimes they make them up. Then give your girl a power. It could be magic. It might be the power to make three wishes a day. Whatever it is, it needs to be effective against monsters. Then help her come up with an adventure. Where is she going? (down to the creek to catch minnows, to a friend's house, to explore the barn at Grandpa's house, etc). Then come up with a peril. Pick one of her fears and have it confront the protagonist. Guide her through using her "power" to vanquish the monster. Happy ending.
Part of the draw of this is that it is something you can do together. What child doesn't want more "mommy time"? Remember to guide this by asking leading questions, guiding her into creating the story herself, don't just make it up for her.
The second benefit is that by helping her to exercise the power of her own imagination on her behalf, you help her learn the tools she will need in order to take control of her imagination. The sooner she is able to do that the sooner she will be able to start getting control of her fears.
If you want to add a little flourish, put each story into a computer and print it out (or hand write it), staple any multiple pages together, and give it to her to keep on her bookshelf near her bed. Any time she want to remember how she vanquished the monster, she has it close at hand.