Antikythera? (I had to look up the spelling.)
Sorry, no -- good for ancient computer-thingies, but not for this quiz question; and not in the right part of Greece.
I had dismissed this as an answer as I thought it was too obvious!
Louis De Benerais (sp?) and I think it was Kefalonia?
Author and island, essentially correct (name of author -- De Bernieres -- looks French; but he's British).
@millemille: with you having furnished all parts, except originally name of the novel -- I adjudge you the winner, and setter of next question.