Since we're reviving this thread, this one does confuse me.
In my last couple of tournaments I've come to believe that a disc like this _is_ in bounds. No?
Someone care to explain the "completely surrounded by water" bit?
All of the tourneys I've played in the DFW area (very limited - 3) have clearly marked the OB on water hazards. So far it's been at the "big drop off". This is clearly the best way to do it. A line of chalk at the edge.
For casual rounds, if you're on the sand bar, you can play it from there. Fun is the key in casual rounds with friends. It's also fun to watch others throw from muddy lies... no relief.
As for the "completely surrounded by water" part. If the edge of the disc is on dry land, it's OK.