Let me be clearer about my Question C:
In (A)(1) the German and the English use of the present participle (Partizip Präsens) are exactly parallel:
der hinter dem Haus liegende Garten
the garden lying [not laying] behind the house
But I perceive a difference between the German the the English regarding the past participle (Partizip Perfekt) as it is used in (A) (3).
English does not use either "lie" or "lay" to translate "gelegen" as it is used in that example. Instead:
der Hinter dem Haus gelegene Garten
the garden situated/located behind the house
But -- and this is my point -- the English verbs "situate" and "locate" are transitive verbs. That is, they take an object:
somebody situates the garden -> the garden is situated
somebody locates the garden -> the garden is located
In the above examples, "garden" is an object in the sentences in the active voice. In the sentences in the passive voice, it becomes the subject, but the verbs involved remain transitive verbs.
In English, when the past participle is used as an attributive adjective, it must be a participle based on a transitive verb. (At least I think that's always true.) That is not true for the present participle, however.
So, for example, one can say:
the book lying there
But one cannot, even in principle, say:
the book lain there
It must be:
the book laid there
the book located there
etc. depending on the meaning
Notice that this is not just a question of *meaning* but rather of *grammatical form*. In English, "lain" cannot be right, because it is the past participle of an intransitive verb.
Of course, if I accept that in this example, "gelegen" does not mean "lain" but simply means "located," then there is no difficulty.
However, since German has both intransitive "liegen" and transitive "legen," and the usage parallels that of lie/lay in English in many respects, I was surprised to see the word "gelegen" meaning "situated" was based on the past participle of the intransitive verb.