I would suggest using F5, option 7 to select an area, then use the mouse scroll wheel to set the water to "static," confirm with the left mouse button, and then move the selection area in a different direction using the arrow keys and the Shift key. Repeat this process until the water inside and around the castle is static. After that, you can remove the water inside the castle without any more water flowing in from outside, since it should now be static.
And yes, you can delete water by pressing the "Delete" key after selecting the area.