[M]: "Counterattack"

If you're talking about that Dungeon, it's connected to the second Castle of the Fortress faction. Question: where to go after capturing the first Demon Castle?
I'm not saying it's a bug, but I don't see a way to proceed ("swim").

This town should be destroyed by a script after it's captured, after which the portal opens. I can't say why this script didn't work for you, but you can try starting over, as you haven't progressed too far. And make sure your game version is 3.1.