Oh weird, you shouldn't be able to speak to Water Mage at bond convo 3 until you turn in the mission 3 second objective of gaining Katnir. I wonder if you still don't have Katnir or if you've managed to complete mission 03 without him? OR if you were able to select the "make a bet" with Katnir when you were dueling? I'll try to put in a fix for you with the newest update, but I'm not sure where your variables are at, lol.
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Oh no need to apologize, sorry if I sounded a bit impatient, I'm just trying to figure out how that all worked and prevent it from accidentally confusing someone again. If I'm reading this correctly though, it sounds like you were still able to finish mission 3 and still recruit Katnir? so I think your progress should be fine for exploring the sewers on the next update. Thank you for clarifying!