Set out around island to find location (4)
I believe the answer is:
site
'location' is the definition.
(I know that site is a type of area of land)
'set out around island' is the wordplay.
'out' indicates anagramming the letters (out can mean wrong or inaccurate).
'around' means one lot of letters goes inside another.
'island' becomes 'i' (geographical abbreviation).
'set' with letters rearranged gives 'ste'.
'ste' enclosing 'i' is 'SITE'.
'to find' acts as a link.
(Other definitions for site that I've seen before include "Place for building" , "Where something is located" , "Somewhere to build, perhaps" , "Web location; place" , "Locale" .)