"But if there isn't a link between Narellan and
Narelle, then surely they must at least have, or have had, a common ancestor?"
Not necessarily. I don't know whether
Narelle emerged in New South Wales, as we just don't have the data from other states. It's entirely possible that it emerged elsewhere and the similarity to Narellan is just a coincidence.
The local language isn't extinct so that can't be the problem.
