If a third of the hydraulic fluid was water, it was like that meme video of the woman who added washer fluid to the car’s oil - no way was that going to work properly.
I'm surprised no one is mentioning this, and the fact the article says this is the second of such incidents...
I don't know if this is what actually happened, but it would appear to be a very effective method of sabotage... Simply putting some water in the hydraulic fluid container destined for an F35 is an extremely high risk-adjusted ROI for any saboteurs.
For counterbalance to this point, it is very common for water to get into hydraulic fluid. Moisture from air condenses in containers when they transition from hot to cold environments.
It would depend on how many months the barrel was subjected to thermal cycling. A more likely cause would be a technician leaving the cap off the barrel during a rain storm (noted in the report).
Sabotage vs incompetence is a tricky question to balance. The DoD has undergone a lot of controversial leadership changes recently, and it is entirely likely that people have now been promoted beyond their level of confidence.
The F35 is deployed at scale and has fairly normal accident rates for a new, maintenance heavy plane. You just don't hear about every single F16 that crashes.