To create water you need only two things:
1. Water mesh with water shader (poolenv for example)
2. Static collision (dont work with embedded) with water material and flags:
Collision Flags for water:
Flags 1
- Map River Flags 2
- Test AI
- Test Camera
- Test Script
- Test Vehicle Wheel
- Test Weapon
+ See Through
+ Shoot Through FX
For Unk VertOffset use 0,002

Both water mesh and static collision must be at same place other way there will be no possibility to swim.
This works same for interiors. You can also add mirror portals for reflections. (two portals at same coords but one with LD,LU,RU,RD second one mirrored RD,RU,LU,LD - one will be for upper reflections second one for down)

Interesting thing is that water placed like that in MLO instance works out of boundaries
(tested at x=25000, y=-25000, z=500)
But outside MLO its not work out of boundaries.