Good luck, let us know how you make out
It is easy for any of us to give advise but do you have representation?
If so what does your buyer agent recommend?
Not knowing what you signed puts us at a disadvantage to give you proper guidance.
Were you ever given a sellers disclosure statement? Did you sign that? Did it mention any issues regarding water?
Did the offer have an inspection contingency?
What was the wording of that contingency?
Based on the wording it will explain what exposure you have if any.
The fact that the inspection could not be completed, is immaterial based on what you observed to that point and why it was stopped. That still will not answer the exposure you have - that is based on what you signed.
Are you still interested in the home?