The mod is not compatible with Canal Builder. mod generates "ford tiles", which is incompatible with vanilla deep water. If you use Canal Builder, only the water at the spawn site works correctly. Is it possible to do just the generation of standard deep water.
You can always install all mods together, if you get no error message, then all of them work nice and smooth.
This version 0.1.0 has no ford tiles anymore, but water and deepwater.
I had a somewhat different problem. I was unable to place water pumps when I had both canal builder and New Islands. Disabling New Islands after generation allows me to place offshore water pumps again.
I have tested with newest versions: New Islands [0.1.1] and Canal Builder [0.0.6] and all stuff goes good. I can go through shallow water and I can't going by deep water. Tested without another mods.