Solution:
There are two solutions:
1.) Delete the current water supply info block before placing down a new one. If you want to delete it, but aren't sure where the water supply info block is located in your current project, follow these steps:
Navigate to the Project Browser and scroll down to and expand Families > Annotation Symbols > Water Test - HydraCAD
Inside that group look for the item also called Water Test - HydraCAD and right click, Select All Instances... In Project
After it selects the current water supply info block, you can place down a new one without error.
2.) The second solution will make it so you don't have to manually delete the info block every time, however, it will remove the Water Test - HydraCAD Extended version of the water supply info block, (this special type of supply definition includes a percent reduction, for example, 10%, of the test data to satisfy certain local authorities) so if you use the Extended version this solution will not be compatible.
Navigate to the same section of the project browser detailed above, Families > Annotation Symbols > Water Test - HydraCAD. Delete the entire Water Test - HydraCAD section, including any items inside it.
Got to Import from the Latest Toolbox located under the Help pulldown in any Revit ribbon, import Annotations and check Ignore.
Afterwards, you should have a water supply info block that can be placed down, removing the old one automatically and not causing an error.
