Doubt the mobo thinking the fan is dead is the problem. It only see's the fan when the 3pin is connected and then if the thing registers the fan at 0RPM it will shut down the computer, but that 3pin needs to be on there, just for the mobo to recognize it's on there. I've had watercooling with now fan attached to the 'CPU FAN' 3pin on the mobo before with no problems...it's worth a shot of course, but I don't think that's the problem really.
Make sure your CPU water block is nice and firm on the chip, perhaps it's not making good contact?
If none of this work, perhaps it is your PSU at fault here....if you have another PSU to try I'd do that.
If not, then it's time to troubleshoot the system.
Pull the mobo out onto something anti-static, glass, cardboard, whatever...make sure the case is nearby so you can hook up the PC speaker in case you get beeps.
Have only one stick of RAM, and vid card plugged in with the keyboard also.
Take out the vid card, see if the system beeps, if it does, then the vid card is giving problems and it's either bunk or simply needs to be reseated. Repeat the same thing with the RAM and same rules apply, if it beeps, the RAM is doing something here, if not, then the mobo or CPU is to blame....buuut if it's just shutting down within 2 seconds, and you KNOW the water block is on there and your water is flowing (you have made sure the pump is working and water flowing right?) then I'd point at the PSU