I agree that you can have the castle emit fluid to form the clouds but there are a few important steps that will help make it keep the look of the castle:

When you emit the fluid from the model, don't use any turbulence or buoyancy or dissipation or dispersion. This way, the fluid will be emitted but won't go anywhere. After you emit enough fluid, turn the emitter off (set the density/sec to zero. After that, turn on some turbulence for 2 or 3 frames then turn it off. This will relax the fluid and make it more cloud like. After that, set the initial state for the fluid and rewind the timeline (make sure the emitter and turbulence is off). Now, on the fluid shape node, go to the texturing section and turn it on for density and play with the settings and do some quick low res renderings. On the same node, go down to lighting and turn on shadowing.

I left out a lot of small things that you have to do, like setting the density curve and other settings but I assume you have some understanding of fluids. If you need more specifics I'll try to help.