I would think that based upon several pieces of information that Margaret's surname was Sheley or Shelley, rather than Lay. Their marriage license dated 31 Dec 1857 shows Sheley. In the 1860 census there is a Rebeca Shelley in the HH who might have been a mother.
William Morgan Ivy makes the transformation from Mulatto or Black to White when he moves from Tennessee to Kentucky between 1870 and 1880.