Learn Italian: La montagna è a ovest del lago. - The mountain is west of the lake.

In Italian, compass directions take the preposition a when describing where something is located. So, "in the west" or "to the west" is translated as a ovest. You do the exact same thing for a nord, a sud, and a est.

Why isn't it ad ovest, since ovest starts with a vowel?

You will occasionally see ad ovest, but adding that extra "d" is only strictly necessary when the following word starts with the same vowel (like ad andare). Before an "o", using a simple a is perfectly correct and very common.

Why is it del lago instead of just di lago?

To say "west of the lake", you need the preposition di (of) plus the definite article il (the) for the masculine noun lago. In Italian, di + il must combine into a single word: del.

Should ovest be capitalized here?

No, compass directions are written in lowercase when they refer to a physical direction. You only capitalize them in Italian when talking about a specific geopolitical or cultural region (like l'Ovest to mean "The West").