You are not allowed to fix things on any home you don't own. That is true. You can't make them turn on the water because if it didn't hold pressure, turning on the water could cause more damage.
But if HUD has repair escrow required for FHA loans at $500, it is probably minor. But if they say no, you can't turn on the water. period.
This is a foreclosure home and you need to decide if it is work the risk (price good enough) or not. Otherwise, walk away. Trying to fight them will not likely work but will waste your time.