* Missing article: You need an article before "school" ("the school" or "a school").
* Word order: It's more natural to put "that" after "school."
Here are some corrected versions:
* James read that the school had burned.
* James read that a school had burned.
The best option depends on the context:
* "The school" is used if James knows which specific school burned.
* "A school" is used if it's just a general statement about a school burning.