select the block or shape, brush etc... that you want to b water. give it da water texture. now right-click and select move to world. technically that duz nothing but if u don't do it, the brush won't become an entity later(hammer is silly like that!). now right-click again and selet tie to entity. now the brush is an entity, the entity properties menu pops up. go to class menu and look for and select func_water.
after doing that u'll get a list of properties in the box below class thing. select render_fx and put in a number between 1 and 255 for underwater visibility, 1 being v clear, 255 being almost solid.mess around with any of other properties u see and understand. ok now go to second tab (can't remember what it's called) and click on box next to passable. there now you hav water. sorry its not v detailed but i'm tired and off to bed now!