It really looks as if the rootball has dried out excessively and is now very hard to rewet. About the only cure for this is to dig up the plant, soak the rootball in water for 30 minutes or so, then replant. As for the water question, excessively alkaline water with a high pH can be damaging. Some means of collecting rain water is one alternative to using tap water. There are also chemical additives that can make unsuitable tap water more usable. I have no idea if these are available to you. Another question is the suitability of your soil. If it has a high pH, culture of rhododendrons and azaleas will be a struggle. The addition of sulfur can acidify soil, but large changes in pH are really not very practical.