I set a block's property to passable in WED, and everything related to player movement in my code has IGNORE_PASSABLE set, but the player still collides with the block. Why is this?

Reading a bit more of the manual (I really should check this thing more) shows me that the passable flag in WED is obsolete. So, how do I make a passable block?

bassically you can't make passable blocks. A workaround would be creating a wmb with that passable block and then add it to your level as map entity and set it PASSABLE

Should I do that for making water, or is there a different (preferably better :P) way?

maybe using models or terrains