If diagonal movement is turned on, Link will not put his sword away if he enters walkable water while charging. He also takes too long to enter un-walkable water with diagonal movement turned on, and he won't enter it at all while charging. With diagonal movement turned off, Link will put his sword away if he enters walkable or un-walkable water while charging, and there is no delay on entering un-walkable water, plus charging doesn't prevent him from entering it with diagonal movement turned off.
http://www.freewebs.com/masterpikachu/ZC%20Content/Incomplete%20Quests/LOZ%2DGeneration4.qst
EDIT: Sorry I had to replace the link again, but I updated my test quest file, and re-posted the link in another bug report of mine.
[780] More Infamous Diagonal Movement Bugs...
Ah. My mistake. I fixed this for drowning but not swimming.
Righty-o.