Although it is secondary to the hack-and-slash gameplay, Castle has a plot loosely based on Norse mythology, told with setting changes, unique items, boss enemies and occasional blocks of text. As the story progresses, the setting changes twice; there are thus three towns, each with its own dungeon nearby. The game has a total of 40 dungeon levels, some randomly generated, others pre-designed.
As the story opens, the farm where the player lives has recently been burnt and his godparents murdered. Suspecting that the arsonists came from an abandoned mine nearby, he enters the mine to take revenge.
The Tiny Hamlet and the Abandoned Mine
The player begins in a tiny hamlet, near which he used to live. His farm has been destroyed and his godparents killed. The first dungeon he will travel to at this time is an abandoned mine overrun with creatures and some weak undead monsters (with no draining abilities). It is four levels deep and features no boss battles or powerful items.
The buildings in the hamlet are as follows:
- The Temple of Odin, which offers healing spells and restoration of drained attributes whether temporary or permanent as well as Remove Curse and Rune of Return, for a price.
- Olaf's Junk Store, which sells nothing but will buy anything, including the "worthless" items that other merchants reject, for which it pays 25 copper pieces (CP). However, it will not pay more than 25 CP for an item, even when other merchants will. In some cases, such as boots and cloaks, the broken version of an item is worth more than the normal, unbroken version (i.e. 25 CP versus even less).
- The house of a sage, who will identify any unknown item for a fee.
- Two merchants, a blacksmith (buys and sells weapons and armour) and a general store (buys and sells scrolls, potions, spellbooks, cloaks, boots, containers).
- Two farmhouses and a village well, which have no function and are purely decorative.
After clearing out the abandoned mine, the player finds the first scrap of parchment, and returns to the hamlet to find it pillaged. He or she then travels to Bjarnhaven.
The buildings in Bjarnhaven are:
- The Temple of Odin, Olaf's Junk Store, and a sage, which work the same way as in the hamlet.
- A branch office of the First Bank of Crossroads, where the player can deposit money. He will then not have to carry the money or risk having it stolen by a Smirking Sneak Thief, but it will still be available to spend in the four shops.
- Four merchants.
- A number of homes and a small fountain, all decorative.
The fortress near Bjarnhaven is 11 levels deep and is held by Hrungnir, the Hill Giant Lord (the only boss in the fortress). Hrungnir carries the Enchanted Amulet of Kings, which grants a resistance to Drain Life (attribute- and experience-draining attacks). When the player Activates the amulet, Part I ends, and the game can be imported or started over in Part II. In general, a winning character carried over will have more experience and equipment than one newly created.
Town in Part II
The castle near this town is ruined. Only the dungeon and parts of the ground floor remain; the dungeon is 25 levels deep and has been converted by the monsters living in it: the crypt has been desecrated, a Necromancer has set up his home (with a bed and desk), and special rooms for elementals installed. The minor bosses are a Wolf-Man and a Bear-Man (identical in stats to their non-boss counterparts, but each having minions of his respective animal type); at deeper levels, the player fights the four giant kings, followed by the Demon Lord Surtur.
The buildings in the town are:
- A central keep, where the Jarl will not admit the player at first, but will provide advice and two enchanted items after specific bosses are killed.
- The Temple of Odin, Olaf's Junk Store, a sage and the central office of the First Bank of Crossroads.
- Ten merchants.
- A number of apartment buildings, mansions and a huge fountain.