Concerning, placement, as was said by Kamuii before, the castle would be placed at the top, we should make the first town with it in a Motte and Bailey fashion except it be Concentric and. This may seem like a similar fashion as to the old G2k1 fashion, but this also has to do with the money.
I plan for a taxing money nation. The council makes some cash to create the castle and walls. After that the King sell out pieces of the town to the Baron and then Baron leases out the land for people to own. This does have to do with Feudal system of Medieval times, but there could be some refining, like allowing the people to buy land for themselves instead of constantly renting. Now, if the choice was made to be able to sell, but in most cases lease, then there would be to taxes coming. The Rentees would have to pay a tax based on a percentage or average payment income difference. Then 15% would go to the Barons and the rest would go to the King. Also, they have preliminary tax that is just for being in the kingdom of 5% or lower average payment income difference to be fairer to people who bought homes. Based on this, they'd have free enterprise, yet you also, can collect money to expand to the region or take care of people with Festival's or entertainment OR a welfare settlement (which shouldn't be needed with the enemies and such). As, for invading, really, I wouldn't be greedy at first. If you just build up your settlement with 4 guards at each post watching over to protect, and build up the army, allowing them sleep in a Barracks that would encourage joining the army, yet they'd still pay the lower tax. That way if there are any enemy settlements they can be destroyed or we can re-locate them (if we're feeling nice today.
). You'd pratically do the same thing with the other towns, except there would be a Mayor or another class to collect money and control the town. People will be happy, because of Rewards, and also you have a staple enviorment to set for others showing to others that were not another push-over.
And with the industry, it's free enterprise, and taxes can have more money. The taxes I've suggested are pretty steep, but there just numbers for you to choose. Also, I can create some basic city plans if you liked the ideas I've stated.