The Lost City
The Lost City featured in Blood Omen. It was the largest of the game's optional areas, and contained twenty eight of the one hundred secrets in the form of switches. It also had a plentiful supply of Battle Artefacts.
In the middle of the Lake of the Dead, there was an island with a teleporter. The teleporter would take Kain to the outer chamber of the Lost City, but it could only be explored properly during a full moon.
The architectural style of the city was very different from everything else in Nosgoth; it was decorated with huge carvings of snakes, and was built on a massive scale in contrast to the land's small, medieval-looking settlements. It seemed like the work of an ancient, forgotten civilization, conjuring up ideas of Aztec buildings.
There were a few demons there, but the Lost City was most notably populated with werewolves. These looked like Kain did when he assumed Wolf Form, and reverted back to their human form when they died.
Although there were quite a few of them, it was difficult to know whether the werewolves (or their ancestors) built the Lost City, or if they just colonized it after stumbling upon it. The possibility of their stumbling upon it during a full moon was higher than for most, as that is when werewolves are traditionally most active; the same reason could be given for their presence on the Lightning spell route. Alternatively the moon-linked security may be a point in favour of it being entirely their creation. We have since seen that two ancient, forgotten civilizations inhabited Nosgoth prior to Blood Omen - the Ancient Vampires and the Hylden - but that hasn't resolved the issue further; the Lost City didn't obviously match either of their building styles. Its origins remain shrouded in mystery.
It appeared that the Abyss in Soul Reaver was located exactly where the Lost City was in Blood Omen. According to Amy Hennig (Director and storywriter of Soul Reaver, Soul Reaver 2 and Defiance), there is a connection between the Lost City and the Abyss, but no further details are available. The changing light between night and day suggested the city was aboveground somewhere, and as the city was reached via a teleporter, it needn't have been under the Lake of the Dead at all. However, Amy Hennig's statement seems to indicate that it was.
We saw what was under the Lake of the Dead/the Abyss in Soul Reaver. The ruins in the Underworld's caverns could conceivably be remnants of the Lost City. The snake imagery is consistant, at least. We can guess that the Lost City may have been destoyed - and the Abyss may have been created - by the movements of the Elder God.