Although he has never appeared in person (so far...), the Time Lord known to humans as Merlin has played a prominent part in the backstory of Lady Penelope's Odyssey - for he is, in fact Penelope's true father, making her the heiress to a very special legacy indeed.
But before I go into further detail, let's get a few basic Merlin / Dr Who facts straight - or as straight as possible, anyway.
The question of Merlin's identity in the Whoniverse is actually quite complex to begin with and concerns no less than three different characters : a mysterious and otherwise unidentified Time Lord, the Doctor himself (who retroactively posed as the legendary wizard at least once in his long adventuring career) and the High Evolutionary known as Merlin the Wise from the classic Doctor Monthly Comics - a character who was (unless I'm mistaken) created before the "Doctor as Merlin" idea came into existence in the TV show (in the Battlefield episode)and - just to make things a bit more fun - may actually be the same character as the Merlin from the Marvel Universe, who played a prominent role in Alan Moore's run on Captain Britain back in the early 80s.
To cut a a long story short :
To be honest, I wasn't aware of all these different incarnations when I decided to build my own Merlin character, whom I wanted to base on Captain Britain's Merlin, who, of course, seemed very Whooesque to me and I already had developed a pretty solid backstory featuring Arthur, Morgaine and Mordred when I discovered how complex the whole Merlin issue was - not to mention the fact that all the aforementioned arthurian characters had actually appeared, in one form or another, in the Battlefield episode...
And of course, there was the sword Excalibur - which I had wanted to use as the central "McGuffin" of my first season...
I was faced with a pretty classic DW GM's dilemma here : either follow the canon or ignore it and go with my own ideas. Since I had decided early on that my campaign would be set in an alternate universe, following the canon was by no means mandatory - especially since the "official continuity" was, in this specific case, pretty labyrinthine and that its inclusion in MY continuity would probably complicate things a lot, without actually adding anything to the campaign in terms of possibilities for the player... so at first, I was tempted to forget completely about Battlefield and all that - but the more I read about this TV episode, the more I was struck by the similarities between its take on Arthurian legend and my own ideas, which were intiially inspired by the portrayal of Merlin in Captain Britain as well as in Camelot 3000. There was so many similarities and convergences here that I simply couldn't forget about it.
So in the end, I decided to take both roads at the same time : I'd build my own Merlin and my own backstory, with my future campaign's plot as a priority (as opposed to orthodoxy to the DW canon)... and using the Battlefield storyline as an additional source of inspiration (and as a way to involve the Doctor into the whole thing) to recycle, reinterpret or alter as needed.
Over the next weeks and months, I'll try to post actual play reports of the first season - which will include the whole "Merlin backstory", presented in a progressively unfolding manner, just like Lady Penelope herself discovered it... but here are a few facts.
Merlin (who was dubbed "the Wizard" as others were dubbed "the War Chief" or "the Doctor")
was a very powerful and whimsical renegade Time Lord - a rebel, a manipulator and an architect, with a tendency to move other people like pieces on a chessboard, when he was not toying with the laws of time and space. But he was also a dreamer - perhaps even an idealist, a truly promethean figure. Unlike the Doctor, he was more a builder than a wanderer, though - he crafted Excalibur, the Sword of Possibilities, and created the dimensional sanctuary of Avalon... but in the end, his creation was destroyed - or rather "corrected" - by the Supreme Council of the Time Lords, leaving only legends and dreams in the memory of Albion... and Merlin the Wizard was sentenced to imprisonment.
But before his dream was erased from History, he sired a child - a "daughter of Time", whom he hid in the future, knowing that she would one day claim the legacy of Avalon - and protect it from her mother, the sorceress Morgaine, who had been Merlin's ally before becoming his nemesis... but hey, that's another story !