Lake circled by horrible scaly monster (6)
I believe the answer is:
scylla
'monster' is the definition.
(I know that Scylla is a sea monster)
'lake circled by horrible scaly' is the wordplay.
'lake' becomes 'L' (geographical abbreviation).
'circled by' means one lot of letters goes inside another (I've seen this in other clues).
'horrible' indicates an anagram.
'scaly' anagrammed gives 'scyla'.
'l' put into 'scyla' is 'SCYLLA'.
(Other definitions for scylla that I've seen before include "In Greek myth, sea monster who lived in cave opposite whirlpool Charybdis" , "Mythical rock" , "Peril with Charybdis" , "legendary menace in Med" , "Charybdis counterpart" .)