> (i) Polar covalent molecules that can H-bond with water (e.g. ethanol)
> Substances that fall under the first category are simply surrounded by water molecules, which act as ligands.
Definitely not ligands. Ligands tend to be more 'permanent' fixtures, and form chemical bonds with another ion/molecule. Water molecules in the hydration shell of an uncharged, polar molecule only remain for a few picoseconds.
> (ii) Polar covalent molecules that can ionise in water (e.g. HCl)
> Substances that fall under the second category ionise in water. Ionisation occurs when a polar covalent molecule reacts with water, forming ions that were not present in the first place.
Weak acids and bases can ionise in water, but only a small percentage of molecules would ionise. The remaining unionised molecules can remain insoluble/inmiscible.
> (iii) Most ionic compounds (e.g. NaCl)
> Substances that fall under the third category dissociate in water; dissociation occurs when a soluble ionic solid dissolves in water, releasing ions that were already present in the beginning.
Many ionic compounds are not soluble, or sparingly soluble.
The model you have given is good enough for VCE Chemistry. I have outlined some cases where they might fail, but it's highly unlikely if VCAA would question you about them. As far as VCE is concerned, it's fine.
We must however keep in mind that this does not reflect what actually happens. We cannot make sweeping assumptions such as "solutes must make hydrogen bonds with water", or indeed any other black-and-white statements. This rife misunderstanding is a problem of VCAA, VCE teachers as well as several branches of chemistry and biochemistry that don't accurately treat intermolecular forces and thermodynamics.