An Island is a land with the subtype Island, not any land that could produce blue mana. For example, Mystic Sanctuary is an Island, but Castle Vantress isn't. Similarly, a Swamp is a land with the subtype Swamp, not any land that could produce black mana.

Activating Lochmere Serpent's first activated ability after it has become blocked won't cause it to become unblocked.

You can't activate Lochmere Serpent's last ability without targeting five cards in a single opponent's graveyard.

If up to four of the target cards are illegal targets by the time Lochmere Serpent's last ability resolves, the remaining legal targets are exiled and Lochmere Serpent is returned to your hand.

If each target card is an illegal target by the time Lochmere Serpent's last ability resolves, the entire ability won't resolve. Lochmere Serpent won't be returned.