Tierra del Fuego by Francisco Coloane is a collection of stories by Chile's greatest maritime writer, set on the southern seas and channels that surround Chiloé. Coloane spent time in these waters and his writing has an authenticity and darkness that captures the isolation and strangeness of the Chiloé coast better than any guide.
The Sound of Waves by Mishima and other island isolation narratives pale beside the specific Chilote tradition — the Mitos y Leyendas de Chiloé by various authors (available in Spanish in Castro bookshops) gives you the mythology direct. For those without Spanish, Chilean Lives by Patricia Stambuk collects oral histories from across Chilean society and includes voices from Chiloé.
Chile: A Travel Guide by Wayne Bernhardson gives good practical and historical context for the archipelago, though it covers all of Chile; the Chiloé sections are among the most detailed.