In theory you can drain the water but the CRD filter is not like the ones I had on my Dodge Cummins where there was a drain tube and pull tab attached to the sensor (pull the tab; water/diesel drain down tube on ground or a container if you put one there; push tab back up). On the CRD you have to undo the sensor wire and unscrew the sensor from the bottom of the filter which of course dumps the entire filter contents. If it was me and because the easiest way to get to that sensor is to remove the entire filter head and filter from the firewall I'd just bit the bullet and replace the filter (WIX 33647 or equivalent).
However, if you have a 1st gen filter head (see fuel head bleeding video on Sam's NOOB guide for picture of the difference) I'd strongly recommend getting a 2n gen head (comes with filter and WIF sensor installed) + the wiring pigtail and install it.
_________________ Sold to LOST member my 05 Ltd, GDE Stg II turbo + TCM tune, SunCoast TC w. Transgo kit, Steiger window regulators, Samcos, Fumoto valve, 2nd gen filter head with Lub. Spec. bleeder, Hayden clutch & 11 blade fan, inverted spare, P-1 battery, BF Goodrich Long Trail TAs, Etecno1 glow plugs, timing belt at 50K miles/8 yrs
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