These things are very rare, usually found by playing the Song of Storms when Navi turns green over some water. They will automatically restore ALL Health and Magic. Note that you can not capture them in a bottle.
From the entrance of the Market, follow the stream into Zora's River, but keep going and you'll reach a pool. Play the Song of Storms to lure it out into the open.
In the Shadow Temple, in the room with the gulletines (sp?) is an island with a Stalfos. Notice how Navi turns green...play the Song of Storms.
When you destroy a Beamos (pillar with a yellow eye inside that fires a blue laser at you) there is a concrete platform where it used ti be. Well, if you get near it Navi will usually trun green, signaling a Red Fairy. Note that this doesn't happen with ALL of them, but some, especially in the Spirit Temple.
Tons of places in the Shadow Temple hold Red Fairies. Notably the room with spikes that fall, near the maze, and a few other places...I really can't seem to remember. Maybe I should go check? Nahh...
A few of the trees before Hyrule Castle (right after the guard in front of the gate) hold Red Fairies. Simply run at it and roll (A button). ta da! Some other trees do the same, but the trees here seem to hold a lot.
Have you ever tried rolling into the wooden crates that can be found almost everywhere? What's inside can be interesting.
In the Lost Woods is a warp point between it and Zora's River. It's a little pond of water with a stone there, and you have to swim down and go through the hole at the bottom (requires at least the Silver Scale). Well, just wade in the water so you don't sink and Navi will turn green. Song of Storms time!
Anyone know anything else? Yes, this list is teeth-grindingly short, but that's ok, at least I made it.
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