When I was a kid, I watched this cartoon/movie on cable TV and it really scared the crap out of me. I don't remember much details, but have searched for years. Every once in awhile I still have dreams about it.
My best guess it aired during the mid/late 80s or early 90s. My guess is cartoon network maybe or TNT? I can't say for sure. It seemed to play around Christmas time, but again, a bit fuzzy on details.
The things I remember about it, was it had a anime style type of art; not over the top (no big eyes, etc), but seemed foreign produced. I don't remember it having any words, but maybe it was subtitled.
Anyways, the plot; as far as I can remember, was it was a girl as the main character (maybe with a brother). Her parents, along with all the other adults where turned into "blocks". That is, they turned into something like Minecraft Steve, but flatter. No real details, other than limbs and maybe "holes" for eyes. They then magically were flown (more like levitating, very slowly) to this castle. The block people where used to build the city/walls, etc The kids had to "restore" there parents, but it gets fuzzy on how they did this. It had kind of an industrial Japaneses feel to it.
It was pretty creepy (for a kid). Unfortunately that is all I remember; hopefully someone here might know what this movie is called?
edit, some links I've found
Lots of references to this "Unico in the Island of Magic"; but don't recall a unicorn in it.