To get the achievement "Doused But Not Out", you have to get your upper portion of your body get wet in the Fallen Garden.
I earned this achievement during my fight with Unknown for the first time in Arcade mode. She basically pulled off a juggle combo on me and once I finally landed on the murky, purple water in that stage, my upper body was wet and the achievement unlocked. Another way to do this is to just go into VS. mode, with a friend or with a second controller, chose characters, then chose the Fallen Garden stage. Once the fight starts, just have the second player score a launcher on you and watch as you land on the water. Achievement unlocked!
Have fun and good luck!
Update: perception3000 commented on my solution, stating the following: "Without a second controller or friend, you can also simply go to practice mode (offline) with any character, select Fallen Garden and then while pausing the game set the mode to "Versus CPU". Now your opponent will attack you and it's just a matter of time until you get wet. Still, thumbs up for this one. :-)"
Thanks for the tip!