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Also (and I'm pointing this out because of the title of your thread), Hammer is completely unrelated to the Source engine. Hammer sucks. It always has and frankly, it always will; if it were changed enough to not suck, it would be so different that you couldn't call it Hammer anymore (I say this as a person who has been using Hammer on and off for over 10 years, so it's not that I'm unfamiliar with the program).
VRAD still compiles lighting into the bsp.
After much mucking about (a new VPK format, who knew?) I've managed to look directly at the water materials. They have $reflectonlymarkedentities enabled, which means that you'll have to enable the "Render in Fast Reflections" property of dynamic entities before they will show up.
https://steamhost.cn/steamcommunity_com/sharedfiles/filedetails/?id=96353222
Edit: you could also customise the material to disable $reflectonlymarkedentities...if you can extract it!
Edit: now you can extract it! https://developer.valvesoftware.com/wiki/VPK_File_Format/vpk2_reader.py