If kids are included in as a part of adult pass do I need to book a seperate reversation for kids where the train demands a reservation?

Assuming they are too big to sit on your knee a reservation will be needed. 

I don’t know whether any operators have separate child prices, but if you use oebb.at you set the passenger profiles and discounts for all as Interrail pass and that will show the full fees for all passengers and keep the seats together, if possible.

The general-old fashioned (and to the utter surprise of many who have not lived that long) kids <4 do not have a ´right´ on an own seat-in fact several railways will not facilitate that-in busy trains.

As anna B explains-you have to add the children for free right when buying the pass as such.

In addition to this, it might be useful to add that you should add the free child pass to your order before checking out. Kids 4-11 are eligible for a free pass and reservations are required for them. Kids under 4 do not strictly need a pass or reservation. The exception to this is night trains and high speed trains. Kids of all ages will require a pass and reservation if you want them to have their own seat/bed. You can find more info here.