Hi GrayRider,
I took a look at your posted pics. I didn't see any water anomalies. You need to post a pic and coordinates of a water wall so we can see the problem that you are seeing.
Spud is correct on the scenery placement folders. As opposed to Object Libaries, they cannot be merged. Here are some reasons why (I will draw on my experience as a developer for this):
1. Developers do not expect that their uniquely named scenery folders will be merged. Therefore there is no mandate that says that the scenery placement files inside that scenery folder carry a unique name. For example, CVX_Landings_Flatten_1.bgl is not very unique considering there could be another scenery folder name (for example) "The Landings at Clear Lake" and it might carry the same flatten file name. If you deleted one with an overwrite you would lose that flatten in one of the two scenery areas. So there is a risk of that happening and you wouldn't even no which one was missing. Unique naming of the files is done by the developer to help him/her keep them straight but is not required and not always done.
2. By merging files, you have made it very difficult to debug a problem or remove a scenery. One of the first steps in debugging is to disable a specific scenery folder in the FSX scenery library and see if the problem is still there etc. You cannot easily do that if your scenery files are all merged. Many times a user has to remove the scenery folder and reload it...again, problematic for a merged set of files.
3. Updates become a problem....as your merged scenery folder becomes bigger and bigger, putting an update in can really be difficult if not impossible. Some developers will release an update and simply tell you to remove the old folder and replace it.....very difficult to do with a merged folder especially if the original folder is no longer available anywhere which does happen over time...how do you even identify which files to remove since you cannot count on a unique naming stucture to guide you.
So, if I were you, would I remove the merged scenery files, and install each scenery folder seperately into FSX....absolutely. You don't have that many sceneries installed yet so do it now while the challenge is stlll pretty small.
Rod