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Powdered sugar has a bit of corn starch added to it to prevent it from getting clumpy. Castor sugar has no such additives (it's pure sugar) and it is not quite as fine as powdered sugar. I would agree that processing granulated sugar in a food processor is probably your best bet. Just make sure you do it in an area that is easily cleaned because, regardless of how hard you try to avoid it, some of it is going to escape and it gets into every little crack and crease it can find. Makes for a sticky mess. In a pinch, you can use powdered sugar as a substitute for Castor sugar, just be aware that you'll be using a bit less of it and that the results will be cloudy and not clear (e.g. syrup) as it would be using Castor sugar.
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