My daughter (aged 8) tries writing stories. She makes lot of spelling and grammar mistakes and always has a dearth of topics. How can I help her to continue her hobby?

thats so nice. even my daughter who is of a similar age does like this. you should encourage her and guide her if she gets stuck, help her visualize things more and also encourage her to read more. also, you can both play games where you just start a story trail and make up stories as you move along.