Sdfghj: Is it just me or is something wrong with this game?
There are missions that just don't make any sense. I cannot get a single building up before I am zerged. Watching the educational material on YouTube, it seems that the timing there is very different than in the gog Version:
https://www.youtube.com/watch?v=bTSOHYInWqI When I try this, I cannot even upgrade the palace. Everything is just destroyed by the snakes and the dragon...
Good news, and bad news.
Bad news first: there's something wrong with the game.
From what I've been able to tell, they balanced it based on a bug. Apparently high game speed broke the build speed (it's why the video you linked goes to 5x speed). When they fixed the bug, the game went from doable to Demons Souls.
But I have good news!
I literally just beat the mission you linked too after days of pounding my head against it. You can abuse build timings to eliminate most of the starting rush, and actually get to the latter part of the mission.
Here's how I did it, and keep in mind the timing is very, very tight. You'll likely only have a few seconds to spare, and it's not helped by the cutscenes constantly resetting game speed and taking your control away.
Place a Wizard's Guild down the south road as far as you can.
Use the expanded view to put a Marketplace on the road, again as far as possible. (this should reveal a snake pit)
Place a guard tower west of the Wizard's Guild, it should be just past a decorative rock.
Place a guard tower just past where the east road disappears into the fog of war. (this should reveal a snake pit)
The Wizard's Guild should finish just before you get the Rafnir entrance cutscene, you need to put down three Wizard Towers immediately.
First - next to the Marketplace Snake Pit
Second - West of the Guard Tower you built by the rock (this should reveal a snake pit)
Third - North of the castle and slightly west. There a cactus(?) there to show the spot (this should reveal a snake pit).
If everything worked according to plan, Rafnir will destroy the east tower you built, or just go for your castle.
The Wizard Towers should all finish mere seconds before day 3, when the Pits all start spawning. Hit all three enchantments, leaving you nearly broke.
The Wizard Towers should each kill their respective spawner, and your castle can defend itself from the last one you didn't kill.
The north tower will be killed by Rafnir before long, but keep an eye on the east and west towers you built, as they can provide a great buffer against rats and minotaurs.
The one Guard Tower you have will provide a nice short walk from the Marketplace for your Tax Collector, and the Trading Post spot should be right next to it, meaning a pretty dependable 600g.
I went with Clerics and Warriors next, heavily defending the castle for probably 20 minutes before having enough Wizards and Dwarves to move out.
NOTE! There is an elemental spawn just southeast of the base. I sadly can't remember what day they attacked, but keep in mind there is a major threat on that flank.