and we made every living thing of water

No living being consists entirely of water
nor was created entirely from water. Those 2, right?

For the first one, the verse did not say living things consisted entirely out of water, as Abdul Fattah pointed out. It also did not say that they were created solely from water.

all living things contain water- when you make something out of a substance, say using flour to make a cake, there remains some of that substance in the final product. using this logic, if water was used to create living things, water will remain in them.
there is more water in a living organism than any other substance- the verse did not say "we made every living thing of carbon" or "nitrogen". it said water, therefore, that would be the most important, or most abundant, substance in a living thing.
all living things started out in water.- "made of water" could mean that we used water to make living things.


But this could go on forever, I guess...:P

Wa Allahu A'lam, God knows best.

Just to add, if one is not sure of the meaning of a verse, it should be left to scholars. Interpretation of the quran is a whole science unto itself, and needs years and years of studying, and immersement in the material, before one attempt to assess what is meant by each verse oneself.