Water source blocks are generated within the same block space as other blocks. I have only found it to happen with stairs and chests.

What I expected to happen was...:
Water source blocks cannot be in the same block space as other blocks. I also expected to be able to open break chests.

What actually happened was...:
Water source blocks occupy the same block space as other blocks. Trying to break or open chests that also have water source blocks in the same space crash the game. It does not crash me to desktop so there is no crash log. I have so far only done it on a friend's server and it simply kicks me out of server with a "lost connection to server". This also crashes everyone out of the server but does not close the server.

Steps to Reproduce:
1. Find sunken ship
2. Find chest underwater
3. Try to open chest

I've attached what the chest looks like underwater and with water cleared out around it. The image without the water cleared out also contains the issue with water source blocks also in the same block space as stairs but it is hard to see.