Water Artifact/Cut out

I recently purchased TGE1.5.2 and have also tried this on a fresh install, also tried some water block code directly from Starter.FPS and from Omroth in IRC chat.

All seem to cause the same 2 problems, one i get artifacts on the water surface. They seem to be artifacts but are actually square and sometimes circular holes cut in the water block and show the terrain underneath.

Here is a example of the waterblock code:

new WaterBlock(ocean1) {
      position = "0 0 -200";
      rotation = "1 0 0 0";
      scale = "2048 2048 403";
      UseDepthMask = "1";
      surfaceTexture = "~/data/water/water";
      ShoreTexture = "~/data/water/shore";
      //envMapOverTexture = "~/data/skies/shivoa/pear1_7";
      //specularMaskTex = "~/data/skies/shivoa/pear1_7";
      liquidType = "OceanWater";
      density = "1";
      viscosity = "15";
      waveMagnitude = "1";
      surfaceOpacity = "0.75";
      envMapIntensity = "0.4";
      TessSurface = "50";
      TessShore = "60";
      SurfaceParallax = "0.5";
      FlowAngle = "0";
      FlowRate = "0";
      DistortGridScale = "0.1";
      DistortMag = "0.05";
      DistortTime = "0.5";
      ShoreDepth = "20";
      DepthGradient = "1";
      MinAlpha = "0.3";
      MaxAlpha = "1";
      removeWetEdges = "0";
      specularColor = "1.000000 1.000000 1.000000 1.000000";
      specularPower = "6";
         floodFill = "1";
         params3 = "1.21 -0.61 0.13 -0.33";
         textureSize = "32 32";
         extent = "100 100 10";
         seedPoints = "0 0 1 0 1 1 0 1";
         //envMapTexture = "fps/data/skies/shivoa/sky_pear1.dml";
         params1 = "0.63 -2.41 0.33 0.21";
         params0 = "0.32 -0.67 0.066 0.5";
         params2 = "0.39 0.39 0.2 0.133";
   };

Ive tried with different terrain tile sizes as I saw that was a problem mentioned in other water block threads. But as much as I tried I could not fix it. The only thing that seemed to work was unticking the option "UseDepthMa" (i dont know the entire name the editor cuts it off) it makes the artifacts(holes) disappear but the water looks very poor.

The other issue I have is when the camera is at certain angles the waterblock disappears totally. I have also noticed the waterblock's bounding box is very small, smaller then the water sometimes. And at large sizes such as 2048x2048 the water block bounding box does not show the correct size. If this does not have a correct bounding box how does one determine if player is inside water block???

Additionally I could not set the water block further away then -512 -512. Has anyone else encountered any of these problems?

Heres a screenshot of my waterblock (137kb):
imgplace.com/image/view/fcab9f756d7d3d07140539607fbf1366

Edit: Im using ATI graphics card, I tried both with OGL and DX and still same thing. Ive yet to try on my other pc.