Hi Wayne,
When you use single +5V supply, the output saturates at around 25mV which would be read as 5 degC. The datasheet suggests lifting the REF pin voltage to keep the output from saturating when measuring negative temperatures.
Another thing you can consider is the error that could be pick up through the water. If the thermocouple tip is exposed or grounded,then noise and DC errors can be introduced to the system through the water.
Hope this helps.
Regards,
Phil