It depends on what do you understand by it. Interaction via the intermediate of "quantum field of some sort created by virtual interactions with the water atoms" is not a valid photon-water interaction? I really think this is only question about labeling, about human consensus what we call "interaction".
I would certainly say that water and light interact (no interaction means no effect). Maxwell equations of light-in-water can be seen it two equivalent ways:
1) One can describe the effect of the water by the material constants $\epsilon$ and $\mu$ of the water. Then one describes by the equations only light, presence of water is hidden in these constants.
2) One can describe all (light+water) as one system and use vacuum constants $\epsilon_0$ and $\mu_0$.
Electrodynamics inside medium is electrodynamics in vacuum where one takes into account charges and currents of the medium.
This all just to say that I do not think your question is "core" physics question.