I actually just recently found a chest called "The Painted Chest", but the "Painted Key" for it is one I've never come across in my >100 hrs playing this game. I'm currently under the impression the painted wood might be in that chest.
I've gotten the painted wood before and it isnt from the chest, there is a tool behind the cauldron in the hut than can be use to interact with the trees in the painted world.
