Does my translation make sense? Who comes to the coloured water? Is szines auch coloured or only colorful?
Colored and colorful both seem OK to me in this sentence. I'm not sure if this course accepts words like 'colour' with the British spelling, but I think your translation is fine.
There is a difference between "colored" and "colorful" in general, though.
"Colored" usually means something that has been given its color artificially by some kind of action. Flowers and peacocks are colorful, but unless somebody put dye on them, I wouldn't normally call them "colored."
In that sense, "colored" could be "színezett", in some cases.
"Színes" can mean that something has a color, as opposed to black-and-white, or colorless. And it can also mean colorful, multi-colored.
And we should not miss any opportunity to use the lovely word tarka when the chance arises. (I find it lovely because I like the sound, but also because there is no equally simple English equivalent. You have to resort to rather technical-sounding words like variegated or particolored which not everybody even knows.)
Now I hope that Duolingo doesn't include that sentence about variegated magpie tails: Nem mindenfajta szarka farka tarkabarka, csak a tarkabarka fajta szarkafajta farka tarkabarka.
I am not sure about this, but "poppig" exists in German. Meaning a little bit more than just colorful, something like striking colors, but not necessarily.
Maybe poppy means the same in English? There seems to be poppy colors, at least based on a flower... No idea if something can be poppy...
For the Germans:
színezett - gefärbt
tarka - bunt
színes - farbig oder farbenfroh
farbenfroh is just cute.
Literally -> Colorshappy!