The possession orb not being able to enter water is merely a gameplay feature. If they were able to hover above water, there'd just be so much more opportunity to possess some firepower and just blast all the explosives and enemies away. If you need an in-story explanation...er, how about the possession orb naturally hovers a few feet above the ground, which means the bottom of a body of water. The result of coming in contact with the water may be that the energy that holds the orb together is dispersed or degraded, causing Abe's psyche to leak, concluding with a natural security feature which brings the spirit back to Abe.
Yeah, that'll do, I guess.
