Game recommendation

Mount & Blade, maybe? Neverwinter Nights 2 has also some castle building portions, but rather passive... well, and of course Fallout 4 (Sci-Fi/Dystopian though).

EDIT: There was a PS2 game called DarkCloud that was very similar to what you describe, dunno if it's available on PC and can't remember if it was any good though. And there's things like Stronghold and Dwarf Fortress, although they don't match 100% what you described... maybe they help putting you in the right direction.

Obvious answer would be a Minecraft server hosted by yourself with MCMMO.

Suikoden V fits those desires to some extent.

http://suikoden.wikia.com/wiki/Headquarters

Any Suikoden ever. You don't actually build a castle but you always get one you can roam around in(except IV, you get a ship instead), recruit the 108 stars of Destiny and follow the plot since it's a typical jrpg. No PC though.
Edit: Ninja'd ;-;

Edit2: And the obvious answer is modded Skyrim. There's quite a few nice castle mods and another mod that allows you to "relocate" characters so you can fill it up with whoever you want. Hell, there's even a mod with a Castle with it's own village next to it.

"Planet Explorers" fits your description rather perfectly. Semi-questbased story-progression, in true "build whatever you want" sandbox style world. I'm personally a huge fan of that genre of games, but that one didn't really interest me too much. So i guess it's a half-recommendation.

Alternatively, Minecraft remains the sandbox king, and if you add some mods (or better yet, the modpacks), you've got stuff to do forever, both to build yourself, as well as explore and defeat bosses etc. I'm partial to the Feed The Beast modpack launcher (and especially Agrarian Skies or Monster servers).

Fallout 4, ARK, Forest

Possible option. But it is a "standalone mmo" so you can play offline and on your own. I have yet to play it though.
http://store.steampowered.com/app/366220/Wurm_Unlimited/

There's Medieval Engineers on Steam, but it's still in early access.
Although not RPG, I would also suggest The Sims games for house building (The Sims 3 is available on Steam, btw).

Life Is Feudal was the first thing to come to mind, but it's pretty MP-centric. As others have suggested, Mount & Blade is probably your best bet, especially given the plethora of mods and tweaks. The Forest is a newer title I haven't checked out yet, but it seems to have what you want with a horror bent.

There do seem to be quite a few titles being developed in this genre, I think it's having its "moment." Unfortunately a lot of them are Early Access, so it may behoove you to play an older/cheaper title (such as Mount & Blade) while keeping a close eye on the development of the newer titles.

Hi! Well, what I wanted to suggest is already posted so...
There is a serie that my father played a while ago and I know it's on Steam: The Stronghold serie, it's by Firefly Studios it might interest you! I must admit that I don't know that much about it though, I can try to ask him some questions. ^^

There is also a game that looks really promising, but it will come out in 2018 and I really want to play it so I thought that I could just drop the link here: Kingdom Come: Deliverance

I hope you will find what you are looking for! :D

Dragon Quest Builders is the game you're looking for, probably, but I think it's not on PC, sadly. I think it's only for PS4, PS3 and Vita but I wouldn't rule out an eventual port since DQ Heroes did eventually get ported. Watch some reviews and see if you like it.

You can't build. But you gain one and then further customize:
Divinity 2
(not original sin but same devs)
Its a quite good rpg, well regarded as a less know jewel, with some neat original ideas (come on, an rpg where you can deeply read minds of anyone- even finding quests- AND turn into a dragon AND own a flying castle- come on!).

OVERLORD
You don't build anything, you own and customize it a little. Also its not a castle but an evil lair tower.
But come on- we're talking one of the most amazing fantasy games ever. Plus a evil lair is way more cool.
Overlord 2 has even more customization- still no real building.

Not exactly what you're looking for but there isn't a single player medieval engineers or the likes of it that i know of, so you will have to settle with the closest varieties you can. Some will feature more building or customization, others more on the rpg/story.

PS: Skyrim have some home mods that are castle sized. Most come without real customization but i know theres home mods made for 're-shaping' or re-theming as you like. If you can have fun with RPing then its a good direction to search for- it made a savegame with a crazy mage more fun for me (he lived in a tower with goats. Was my joke character). Not to mendion hearthstone dlc for building homes (not castles)
I bet oblivion have even more choices if you're into something older.

PS 2: Fallout 4 and Divinity Original Sin (1 & 2) are the only sp rpgs i know of that try 'build your place' style but one is a wasteland community o shacks behind walls without dragons and the other is house, no castle.

Metal Gear Solid 5 and Dragon Age Inquisition maybe but both are more of collecting stuff/people to upgrade

I don't have any experience with it, but Kenshi might be worth checking out. It looks to still be very much in development. Single-player, open-world, RPG elements, structure building. M&B is still probably a better first pick.

Alright. Firstly, I would recommend Life is Feudal: Your Own, which is almost exactly what you're looking for, except it is multiplayer only. However, you can create your own server and play alone if you want. I can also recommend Life is Feudal: Forest Village, which is not exactly 100% what you're asking in your post, but it may interest you, and it is single player. There's even this game called KINGDOMS, which you may like.

What about Fallout 4? You can build a castle for your settlements and level your castle up as you upgrade it. Plus this game also is a singleplayer 3rd/1st person open world RPG with an active world.

State of Decay (Originally release Nov. 2013; Year One Survival Edition release April 2015)

Play as a survivor in a zombie apocalypse in third person perspective. There are 8 home sites in total throughout the single player story that can become your main headquarters. You have the ability to upgrade defenses, build stations to repair your tools and heal your fellow survivors, safe keep resources, etc. Outposts can be established around the main base to extend protection outside the boundaries of the home site.

Bamp

I was looking forward to this game, is probably everything you are looking for but it didn't hit it's kickstart goal and no news from it.

https://www.kickstarter.com/projects/1601737664/melee-battlegrounds-spiritual-successor-to-the-crp

http://melee.org/

Probably best video:
https://www.youtube.com/watch?v=JFjlp3nnJgg

Divinity II: Developer's Cut

The two titles that immediately spring to mind are Mount & Blade: Warband and Kingdom Come: Deliverance, but both have already been mentioned. If you want something that is more RPG and less open-world, you could try Pillars of Eternity. There is an entire section of the game devoted to "building" your keep. Basically, you quest for money and items, and then you decide when and where to invest your wealth in refurbishing the abandoned keep you have secured. (Rebuild the library? Or outfit the battlements?) Eventually, the ruins you begin with are transformed into a fortress. Then, the siege comes....

Mix of crafting, hand-crafted world with stories and RPG elements... that's a tough one.
Making it a 1st/3rd person rules out great RTS and turn-based games.
So basically, you want to build your own hub, adventure to upgrade it.

If you do find the game, lemme know. Sounds interesting.