All credit for this achievement guide goes to Andrew x360a and Fizzmatix of Xbox360Achievements.org.
Mostly a boss guide.
Boss: Water Dragon
Ice Spears: The dragon will wave his head and about ten ice spears will come out. You can simply use Reverse Wind back and forth along the platform. If they hit you, they can knock you off, so be careful.
Roar: This roar causes a plume of water to shoot forward through the water towards you. You can't block it, so your only real defensive option is to Reverse Wind away from it at the last second.
Water Whip: This attack is only an issue if you're in the water. He will whip the water with his tentacle, sending a shock wave along the water. If you're on the platform, this does nothing. If you're in the water though, it can deal some serious damage and there's almost no way to avoid it, so stay out of the water if you can.
Ghost Fish: If you do end up in the water, then sometimes the ghost fish will attack you. Hammer the buttons to get free and pull out the Gatling gun to take them out. Be aware that the Water Dragon will still be around and looking to attack you. The best thing to do is stay out of the water.
Grab Number One: If you're in the water, he will swim through and grab you is his mouth then start eating you. Hammer all the buttons to free yourself. He really doesn't pull this move very often.
Grab Number Two: This is easily his most dangerous move. When you're swimming underwater, he will stab his tentacle underwater and whip you around, then throw you very far. This is easily his most used attack when you're underwater, so be VERY careful. There's no real way to avoid this, so try to stay out of the water.
Strategy: There are two ways you can do this.
The slow way is to stay on the platform and launch level two arrows at his face. You can avoid his particles easily enough, and his roar is his most dangerous attack. If you learn to time is roar, he is very easy and you don't have to worry about his other attacks, because you won't be in the water. Occasionally, he will rest his head near the little platform that you're on and if you're near the left side, you can hit him with the Lunar Staff for some easy damage as well. Regardless, as long as you aim your arrows carefully and wait for him to stop moving, you should have no trouble taking him down.
The second way is very dangerous and requires a level three Lunar Staff. As soon as the battle starts, jump in the water and swim to an open area. Wait for the Dragon to come and dive underwater and start spamming on his stomach. It's very powerful and deals a great deal of damage, but is hugely dangerous. The Ghost Fish can attack you and ruin the entire run and his grab attacks are almost completely unavoidable when you're underwater. If you get lucky though, you can end the fight very quickly.http://www.xbox360achievements.org/game/ninja-gaiden-2/guide