It will overwinter fine at the bottom of the pond. The advice that you got is sound, if you repot it now it will set it back. Ideally, you'll sink it to the bottom just before it's too cold to have your hands and arms in the water.

It looks like you already have three lilies all growing well. I am more concerned about your small pond. I would guess that one plant is enough. I would have guessed that you could have put them at the bottom right away and that they would have grown better. However, they are growing fine as is. The problem is that next year, they will grow better and larger and your pond will vanish. I also doubt that your pond medium matters much. I think you could use almost anything as long as it is topped with some fine gravel etc to prevent 'dirt' from floating away. I have never heard of cutting the pads off, but they will break or rot off anyway, so I suppose it is a good idea.

Thanks, Chas and PK! Here is the latest: I looked more carefully at the lily (the rest of the plants are water hyacinth and water lettuce to give the fish cover) and i saw that the coco fiber was being held in tightly with plastic netting and roots were starting to penetrate the whole package. I know that hardy waterlilies grow from a rhizome and that it could never grow if it was all trussed up like this. Plus I had added some sort of biological string algae controller that has bacteria that bind of PO4 and nitrates and other stuff that plants need for nutrition so I was concerned that the lily would just be starving. I spent about a half hour removing the netting and some of the coco fiber without damaging the roots (hopefully) that were hanging out into the water. There was no space inside for anything to grow. I potted it up with the root end near the side of the pot lower and the growing tip in the center up at the surface. I stuck a fertilizer tab underneath.. The top is covered with pea gravel. It is back in the pond. I feel bad that I disturbed it now but I believe it was the right thing to do because of how it was packaged. I like that I should sink it just before it is too cold to put my arm in. Plus my pond is small because of small property. Thanks so much for your input.

I'm new to water lilies and saw mention of fertilizer tabs. Can someone elaborate on the fertilizer tabs, are there tabs made specific for water lilies in ponds, how often (and when) to apply, etc.? Thanks

I got a bottle of them at a pond store and follwed the directions on the label. They are specifically for waterlilies. I think you are supposed to put one into the growing medium by shoving it in to the depth of your finger, then put the pebbles over that spot. Once a month. But really, you must follow manufacturer's directions. Waterlily looks happier after planting. Sent up a new leaf already.