Whenever you overlap the maps of the three games, OoT, WW, and TP, the landmarks of said games match up fairly well, give or take a few degrees based on game design and need of use. Assuming that Death Mountain is Dragon Roost Island, considering the only volcano that's been in the games thus far is Death Mountain, you can overlay the three maps on one another and the mountain is always in the same northwestern spot on the map. That's one location locked in. The second major location is typically the woods that are usually in the southern portion of the map. When you take OoT and match it up with WW then the location of the Great Deku Tree is relatively in the same place, like Death Mountain to Dragon Roost. In TP, Hyrule Castle is moved to a more central location and the Temple of Time is now found in Faron Woods. This makes things a little difficult to place considering that temples have a hard time just moving. The most logical thing to say on that is that the forest became overgrown and took over castletown but that just adds to the complication of why isn't the mountain overgrown? It's difficult to explain logically as there really isn't any logic behind it.
Also, when you take ALttP's map and rotate it a little to match up everything, Lake Hylia, and Death mountain mainly, then that map also coincides with the basic setup of the world map, with the exception of the forest now being in the northern portion of the map and not the southern. The forest moves around the map a lot, making it a big nuisance when trying to place certain things and make sense of others. It's very confusing and illogical to some degrees. It's instances like this where you gotta just go with it.
As for Hyrule Castle being in the middle of the lake? You have to remember that Hyrule in WW is destroyed. Whenever walking through the field at the end of the game, remember that everything is in shambles and the ground itself is cracked all to hell. It wouldn't be a stretch to think that during the initial flooding that some water was trapped around the castle itself or that the acquifers erupted and caused some flooding as well. As for the idea that it's Lake Hylia? If they kept with the consistency of the maps... then no... the castle would not be on the lake. I'd say it's just coincidence and decoration that there was water around.