An accurate and efficient description of the spatial distribution of laser energy is a crucial factor for the modeling of laser material processing, e.g., laser welding, laser cutting, or laser-based additive manufacturing. In this study, a 3D heat transfer and fluid flow model coupled with the volume-of-fluid algorithm for free surface tracking is developed for the simulation of molten pool dynamics in high-power laser beam welding. The underlying laser-material interactions, i.e., the multiple reflections and Fresnel absorption, are considered by a ray-tracing method. Two strategies of free surface reconstruction used in the ray-tracing method are investigated: a typical piecewise linear interface calculation (PLIC)-based method and a novel localized level-set method. The PLIC-based method is discrete, resulting in non-continuous free surface reconstruction. In the localized level-set method, a continuous free surface is reconstructed, and, thus, the exact reflection points can be determined. The calculated spatial laser energy distribution and the corresponding molten pool dynamics from the two methods are analyzed and compared. The obtained numerical results are evaluated with experimental measurements to assure the validity of the proposed model. It is found that distinct patterns of the beam multiple reflections are obtained with the different free surface reconstructions, which shows significant influence not only on the molten pool behaviors but also on the localized keyhole dynamics.