I know this is going to sound dumb but I am standing at the moat and can't get in the castle for nothing. What am I missing? Thanks.

Did you flip the underwater lever? You should be able to follow your way around the moat, and find a broken section of the castle wall, whereupon you can enter the castle..

Er, I had this problem. Stand facing the gate, swim left, until you reach the alcove I camped in to avoid the many beasts hunting me. Okay, now do something I didn't do the WHOLE night I was there . . . look down. SAVE (I don't swim well) and dive and swim until you find a lever which opens another water tunnel. Its a bit confusing but swim around until you come out on the other side.