I don’t think Billy is necessarily lying, if he was the only person Winnifred was ever involved with (even if just a kiss in the graveyard), and she considered him her soulmate, it would probably count. He also never denied he was with Sarah, just that he didn’t consider himself to have ever been Winnifred’s lover. To him, it was one kiss 40+ years before his death and probably only one of many, since I’m assuming he did have a relationship with Sarah, but to her it was more. Based on the original film, I thought he was a 45-50 year old man who had a affair with two much older women (they were clearly at least in their 80s, if not older at the beginning of the first movie), so the whole backstory in the second film didn’t make much sense to me, though it was fun.
The holy ground thing wouldn’t have affected Winnie or her sisters pre-practicing magic. The magic of the first film is clearly a lot different and based on historical depictions of magic being caused by a deal with Satan, which is why they can’t step on holy ground. The sequel only keeps the holy ground part, but bases the magic more in a modern conception of magic, so it doesn’t really make as much sense to me, but I assume it would be specifically practicing dark magic.