The system started use in 1984, when 100% of all castle structures used the modular system. 1985 saw no new structures, but 1986's lineup featured 3 more structures, again, 100% of which were modular.
With the advent of Forestmen in 1987, some structures did NOT use the modular system, understandably so, since they were distinctly non "castle".
In 1988, Black Monarch's castle deviated from the system by being a black castle, and also by having crenelated walls that were 2 plates taller than normal (I think some other select castles may have deviated by being 1 plate shorter prior to this).
In 1990, 3 sets were released with modular connections, but 2 of these varied from the standard so greatly that they might as well not even be called modular. While 6059 Knight's Stronghold adhered to the wall standard (with a black wall), both 6034 Black Monarch's Ghost and 6081 deviated greatly. 6034 was unable to connect to other castles on one side because it was blocked by a clip (the other side was fine), but the crenelated wall was 1 brick and 1 plate shorter than the standard. 6081 differed also, since it was the first enclosed castle NOT to open up (since it was on a raised baseplate), and it only featured ONE connection point, with a connecting wall that was 2 bricks and 1 plate shorter than the standard.
After 1990, no new castle sets were released with the modular system in mind, although 1990's lineup was still offered for a few years following its introduction. 2001 saw the re-introduction of the 6067 Guarded Inn, and the re-release of 6074 Black Falcon's Fortress was seen in 2002-- each of these sets featured the classic modular walls.
There is a possible exception in 2007, with King's Castle Seige, which was constructed in a modular way, and deviated from the classic modular system by having 1 brick taller walls. I don't recall offhand if other sets since 2007 would similarly technically fit with the modular system, but it's entirely possible that a few others might also fit with the classic technic pin connections.
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Here's a rough cross-section of each of the types of modular wall designs:
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DaveE