Translation:Amsterdam is in the west of the Netherlands.
I would say it's acceptable. But it's bookish. 'ligt' is completely unmarked in Dutch: het boek ligt op mijn bureau is both 'it's on my desk' and it might be, in combination with the right adverbs, "it's been sitting on my desk unattended to for ages". To go more formal, closer to 'is situated' I suppose you would use 'bevindt zich' (literally 'finds itself', with many equivalents in other languages). 'gesitueerd' itself also exists, but is used in more abstract senses: goed gesitueerd = 'well to do', 'rich'.
Soooo, could one assume that the use of "het + westen, zuiden, etc." is almost like a preposition? In the sense that it requires another object to be relative to. Must we always use another object; could we hypothetically say "Amsterdam ligt in het westen"?