It's not entirely clear where the nanites got the idea of sea serpents. The evidence that they did, however, is exceedingly large.
The Water Dragon's body is covered in blue-green micro-scales that are so fine that they feel smooth and only lightly textured to the touch. Her head is reptilian, but softly rounded, with teeth that look more suited to munching kelp than rending and tearing. A webbed fin crests her head between her ear-holes. Her body is perfectly proportionated with brawny muscle, but also a thick layer of plush fat padding -
all the better to keep warm in cold waters! She has 2 hefty breasts. Her arms are deceptively rounded, but a moment's observation reveals a good deal of power beneath her plump appearance, capped with blunt claws more suited to digging than fighting. Her legs are well-sculpted with generous thighs and calves, like those of a marathon swimmer, ending in three-toed webbed feet capped with blunt claws. Her ass is large and bubble-butted with feminine wide hips. A frilled tail emerges from the base of her spine that is as thick as her legs at the base and nearly as long as she is tall!