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1) Not linked. Click on MapPropertiesTree at the top of the screen, then in the right panel, expand the "players" line, select the desired player (numbering starts from 0), and set HeroInTown=true.
2) Didn't see it.
3) Which water are you referring to specifically? One can be created using the tiles->raise tool. The other (the one created using rivers) can be created using the up tool.