1. you don't have to dig a hole first 2. the water drop is in the shovel icon tool. the more you click in one place the deeper the pond goes. There are three sizes to use when makeing a pond. Small, medium and large. I hope I helped.
I used the water drop to create the pond...but its not blue like most ponds....sorry if I wasn't so clear
the water color depends on the depth of your pool. Use the shovels to help you get the color you want.