Cheers Arran, It was a bad texture on the bottom of the island that reflected the sea and with the displacement map made it look like water!

I really just wanted to post a pic so far to show I havent given up.

I think this pic shows it better, (i've adjusted the mateial to make it more earth like) you can just see the lagoon in the middle of the island this is where the water fall will come from. (im thinking of changing the camera angle to show it better, as I will be adding more of them floating about with one "crashed into the sea.