Glad I can help
Always make sure you wash the car first before using any clay bar on your paint. After washing and drying run your hand over the finish. If it doesn't feel smooth as a babies behind then claying would be a good idea.
Clay bars use a shearing force to remove bonded contaminates from your paint. They are for removing things like brake dust, rail dust and other pollutants that bond to your paint. Water spots should come off when you wash the car. If they don't then likely the paint is etched and claying will not remove etching or swirl marks.
If I could only say one thing to someone before they use a clay bar it would be to make sure you use plenty of spray lube. Clay bars can be dangerous in that you can scratch the heck out of your paint very quickly if you are not careful. Make sure you frequently check the clay bar surface and fold it over frequently. There is a good article on using clay bars at
http://www.autopia-carcare.com/inf-clay.html.
I am a big Meguiars fan but, I don't particularly like their clay bar kits. It is more expensive but, I think the Mothers clay bar kit is much better. One of the things I have noticed and have also heard from others is that the Meguiars clay bars leave behind clay residue.
Can you clarify your water spot problem? Do you mean after washing your car or after a rain????