Also after doing more research into Santa Claus I am questioning if it is wrong to have children who believe in what is now considered Santa.
Is it paganism?
Protestant elements?
Demean and denigrate the Birth of Our Lord?
Magical/evil elements?
I think you should celebrate the holiness of St Nicholas in the way the Church wants us to celebrate it. St Nicholas was a great saint. He was present at the Council of Nicea and allegedly personally fought with Arius when he presented his heretical ideas.
The holiness of St Nicholas include;
generosity
love of neighbor,
giving charity in a way that doesn't humiliate the reciever of the charitable offering
love of God
orthodoxy in faith.