You have a few things going on. Is it dark up where you are at 8:30? Here is is still bright light. And it will be that way until October, so I would cover our daughters windows with quilts so she felt like it was night time.
Maybe you need some black out curtains?
I used to let our daughter stay up reading as late as she wanted, in her room. This was with the agreement that in the morning she had to get up on time for school or whatever was planned. IF she BALKED in the morning, I would set a bedtime for her. This worked fine for her from about 4th grade, middle and high school. She knew how much sleep she needed.
She sometimes would get spooked, so we would just talk about how creative people cab easily scare themselves with their imaginations. So she would need to remember that it was all on her mind. We asked her, "what would make you feel safer?" She said "a bat next to her bed". So we found a bat a garage sale and that seemed to help. She had a lamp right nest to her bed and she had a CD player that played music that she felt calmed her. We also had a flashlight for her.
Also I reminded her that if she woke up from a bad dream, to roll over and the dream would go away.
The younger child is testing. The rules are to not speak to her, just walk her back and tell her "it is time to sleep". "Do not get out of bed."
And yes, a gate may be necessary to keep her in her room. Even if you find her asleep on the floor, leave her there. a night light is fine.
You may need to find a light switch cover so she cannot turn on the light in her room until she gets out of the habit of turning on other lights. She will be just fine with just a night light.
Do this over and over.