Line 2, believing lyre: religious worship.
fond: perhaps has the older meaning of "foolish"
and the modern one of
Line 3, haunted: filled with spirits.
Line 6, lucent: shining, giving off light.
Line 7, faint: weak or faded.
Line 2, fane: temple (or church).
Line 6, fledge: feather.
Line 7, zephyrs: breezes.
Line 8, moss-lain Dryads: wood nymphs lying on mossy banks.
Line 10, sanctuary: a holy place; also a building or place set aside for religious worship.
Line 13, Fancy: The fancy or imagination is often portrayed in literature as a gardener who improves nature.
feign: devise or invent.
Line 17, casement: window.