You probably don't need this answer by now but still want to give you my opinion.
In a normal world of real estate, if you are represented by a realtor and a lawyer who works for your best interest, you shouldn't be in this dilemma. You have a contract and contract protects you if any unfavorable outcome or hurdles arise, Of course depending on the language of the contract that you signed.
With regards to the seller fixing the water issue, that's not uncommon to hear. especially if you have a well water. Shock disinfection for private water well is is a standard and common process. If it pass the re-rest process, i don't see any harm in moving forward.
However, the radon test seems fishy and sketchy. Was the radon re-test properly done? I just don't understand how will the reading go down from 6.3 to ,8. That is a significant decrease. Another question there is when was the re-test done as compared to the original testing. It just doesnt sound right.
You should consult with your attorney on how to move forward with this sale. And don't forget -- it is still a buyer's market.