silwritersguild | Writing the Elves

I'm still pretty new to Tolkien, even though I've learned a lot about the mythos, but I am having trouble with a project I want to write--specifically, having trouble with some of the Elven details.

My story will take place on a timeline of about 20 years, and two of the main characters will be Elves. Can I create a special village or place for their Elven community, or did the Elves only dwell in listed ME places like Mirkwood and such, especially since they were fewer in number in Middle-Earth and many went to Valinor? Since the story will be set against the backdrop of the second big war against Morgoth, is there a specific way I must potray this community's involvement in that? My idea is for the community to be beseiged by the enemy's forces at present.

Any help would be appreciated.