There seems to be an issue with water with the most recent version on Bukkit dev. When you place water in a confined space, it does not flow. I believe this might have been due to the issue with the transparent blocks that was fixed in the last update. Any fix for this would be apprieciated.

Hmmm. Are you sure this is a FamilyJewels issue? The plugin doesn't hook any block change events to cancel them... although I imagine it's possible that something weird is going on.

Did you disable all your plugins except for FamilyJewels and see if the issue still exists?

If so, does disconnecting and reconnecting to the server update the water for your client?