No, don't put water in with oil, it does nothing. Just go to your Volkswagen dealership, and the service guy can help you out or just read the driver's manual that came with your car.
You're right, the light probably meant change your oil, don't add water, besides your car is only 1 year old, it wont do much harm. On most cars, you can at least go 1000 miles above if you didn't already change your oil if you needed to.
Hope this helped.