I've been having this issue since before the patch so it's not related to it.

As you can see in http://img27.imageshack.us/img27/8297/2012032100014.jpg I get this bright blue specularity on a vanilla water. It changes color depending on the angle.http://img215.imageshack.us/img215/8905/2012032100015.jpg you can it's no longer blue but red.

It only happens when I add more than 1 light. With just 1 light it's not there but as soon as I add a second light it appears. Setting lights to 'Doesn't light water' makes no difference also that spec isn't tied to a light as it always seems to be coming from a source in the north. Is there a Cell setting I need to set?

Okay I think I found the problem. If you set *any* lights to 'Doesn't light water' then this will happen. Doesn't matter where the light is in the level, if just one has that setting enabled you get this chroma-like specularity.