It seems to me the more idiomatic English translation, which was marked wrong the first time I got this, would be "The turtle lives in the water." I can envision a rare case in which I might say, for example, "The turtle lives down in the water, not up on the beach," but it would be a peculiar case to be sure.
I'm still not clear on 'bor' vs 'lever'. User atcsandra says, "Bor is reside. It refers to the place where a person lives. Lever is live in the sense of being alive." Doesn't 'bor' make more sense here, then, talking about the physical location where that turtle lives? Also, if I say something like, "Hun lever med hennes morfar," is 'lever' or 'bor' more appropriate here? (I would think lever)