I'd seriously question anything a breeder who sells pups at 7 weeks says. All puppies and dogs should always have fresh water available to them. It's our job to house break them, but never at the expense of the pup's health or well being. They can't tell us when they're thirsty. I've house broken numerous pups and NEVER limited or withheld water, so it can be done. Some are quick, some take a little longer. If your pup is having watery stools, I can assure you it has NOTHING to do with how much water it's drinking. Medically, I can tell you that the bowels will retain or reabsorb water regardless of intake. Especially when a pup is having diarrhea, you need to make sure that the pup is well hydrated! Your breeder need their head examined. Take the pup to the vet. ASAP.
Wrath of Grim z Dragon
"Mr. Grim"- Threaten my handler. I dare you.