The lack of distinction by the windows doesn't have to do with the brightness or darkness of the shadows, I don't think, but rather the fact that EVERYTHING is in the shadow there, thus making it all the exact same brightness. I think it would be fine to add lights to the castle, too. The shadows don't need to be any darker.
I'm worried about all that water -- it's going to be a framerate killer. Water hurts framerates worse than high r_speeds because it's transparent and tessellated so that it can be wavy, which the r_speeds don't account for. Also, with reflective water, well, the problem is tenfold. Plus you run into the problem of having a square block of water with no boundaries. I think it would look cooler to make it look like it's on some super tall cliff that just disappears down into oblivion.