To my (non-native) ear, both B and C sound unidiomatic. It is not because C is a phrase and not a full sentence, but because the meaning you want to convey calls for the preposition "from". All three constructions:
Water from the sea
Water of the sea
Water in the sea
refer to sea water (no one would think you are talking about tap water, e.g., if you used any of these, but it is the sentence you use them in that makes a difference).
If you look at this Google Ngram you might think that "water from the sea" gained slight advantage only in the last 50-60 years, but if you try to look up a definition of "seawater" or "sea water", many dictionaries will not use the construction "water of the sea". Here is an example from ODO:
Water in or taken from the sea
and you will find matching or very similar definitions in: LDOCE, M-W, Macmillan and AHD.
An aside: even though your question is about prepositions and not articles, as you can see in the Ngram linked above, and as TRomano said in comment, you need the definite article there.