1. Isn't there elliptical collision mode? I could be wrong... not fiddled with Construct in a while.
2. Just create an object and call it water. Then whenever another object overlaps that object, you can do all kinds of stuff to it such as making it float up, damper movement etc. I'd suggest using something like tiledbackground object (minimal texture) and an effect on top of it to simulate water (warp?).
Like:
Sprite overlaps Water > Sprite('Oxygen') = Sprite('Oxygen') - 10 * Timedelta