According to the legends, the Mortal Mirror was not meant to easily be found. At one point, someone made it look like the mortal mirror was a small compact mirror, in case anyone attempted to look for the mirror, in an effort to mislead people. Thus, for a long time, the Mortal Mirror's whereabouts and information regarding the mirror remained a mystery for the Nephilim.
The lake's waters has hallucinogenic properties that may drive those who ingest it to madness if left untreated for too long. Despite not many people knowing that the lake can be poisonous to the mind, it had simply become common knowledge among many Shadowhunters to stay away from the lake.
Being a Mortal Instrument, the lake can be used to summon Raziel. Its participation is simply being the site of the angel's rising. Dropping the two other Mortal Instruments into the lake, standing in the water of the lake, and calling for Raziel will summon the angel.
Sometime in the 1990s, Jocelyn Fairchild got ahold of the fake Mortal Mirror and set up a series of protective measures to hide the Mortal Mirror like she did with the Mortal Cup. She entrusted the warlock Elliot Nourse with its location. Elliot wore a sigil: a complicated map that coordinates with ley lines in New York City and leads to the "mirror's" location. Elliot placed a spell on that sigil to have it removed from his own skin and transferred onto another warlock upon his death; Elliot chose Dot in 2016.
This was able to briefly trick Valentine, Jonathan, and the rest of the Shadowhunters that the mirror was in their hands. When the "mirror" was destroyed by Clary's rune, she realized that it wasn't the mirror. Remembering her dreams of the lake—visions from Ithuriel—she realized that Lake Lyn was the mirror. When this was reported to Alicante, Valentine found out the truth from his spy in the Council. Valentine was able to go to the lake and summon Raziel.