Maybe it's a bit like the time cracks... They erased Amy's parents from history but Amy is still here even though that should be impossible.
Also time crack erased people CAN be remembered. Amy subconciously remembered Rory and could actively be reminded of him.
Time Lock could work in a similar way. Gallifrey is still there, we know that much, but hidden behind a nearly impenetrable wall of timelock. Gone from the perception of lesser beings. Suspended in a single moment of (non)time (no causal connection to any other moment in time).
The timelock is not unbreakable, Dalek Caan did it and the Daleks are back in full force.
The Timelords nearly did it by finding that one thread left to the rest of the Universe and using it as a lifeline.