Hallo!

I've never thought about the possibility of capturing ingame scenes with my digi cam. I also have Pinnacle Studio 8. Great! The only bad thing is, that Pinnacle haven't got a good save system in this version (its my opinion).

For the water:
Always use terrains for it! And then give them a river/ocean etc. shader with fallback function which means that the water also appears, when the player hasn't got a graphic card which supports shaders! For this case, use a normal water animation code for this terrain as in AUM36!