2. Often sheep were looked after by the children.
If you are talking about more that one sheep then 2 is correct, if you are talking about one sheep, 1 would be correct with the addition of "a" before "sheep". If, on the other hand, you are talking about an animal or a person named "sheep" 1 would be correct with a comma after "often".
Why do you want to change that sentence to passive? It doesn't serve any purpose, some sentences just would not naturally be in passive voice.
Student or Learner