water as a symbol of good

[Nilpaurion Felagund]

Water is Ulmo's touch. Ulmo, after all, hated the whole fad about bodies.

Also, water is the substance where the Music of Ainur has been "recorded". If you think of it this way, the drinking of water in ME involves both a physical and a spiritual act. Although the Men and Elves were created by Eru's song, not the Music, the drinking of water may be seen as a connection between the song of Eru and the song of the Ainur. Plus it sustains their life in this realm fashioned by the Music. Another connection between the two chart-topping hits.

Could the Nazgul drown? They aren't alive, I know, but they could still be defeated in a way, like in Eowyn's case. Could they have been greatly lessoned by being underwater for a time?

But then why fear fire, also? They had no flesh, so it wouldn't make sense that they would fear being burned. It just doesn't make sense. (Gurthang)

All life on ME is nourished by this water. Perhaps the Nazgûl fear the water as much as they love/hate blood: It reminds them of the life they once had.

As for fire: Well, the Flame Imperishable brought life to the Ainur and Arda (and all in it). Perhaps the Nazgûl are tortured by this reminder that they are now "cold" flame.

Or perhaps I'm reading too much into this. After all, your explanation of the otherwordly aspects of fire and water is quite a good idea.