Dead in the water means unable to continue, work, or succeed. The correct answer is this meaning because the expression is used figuratively, not only by its literal words.

Examples:

• Without funding, the project was dead in the water.
• In an HSC essay, Dead in the water can express this meaning: unable to continue, work, or succeed.
• When this expression appears in a passage, connect Dead in the water with the idea of unable to continue, work, or succeed.