I'd have been fine with it either way, but I just thought I'd ask because I wasn't sure quite how to interpret what you'd said.
So far as the bags of water goes. I expect the most obvious explanation would be that a fly would "think" (if bugs like flies have brains sufficient enough for an actual thought process), that everything hovering in the air is flying, and anything larger than it could potentially consider the fly a meal. So, to the fly, the bags of water are potentially much larger flying insects that may want to eat it.
And, the way you'd test to see if that's what the flys are thinking is to see if you get exactly the same results using helium balloons instead. If the flys stay as far away from helium balloons as they do from bags of water, that suggests that it's not the bag or the water, it's the fact that it's big and can also fly, and that makes it potentially dangerous in the fly's mind.
My guess is that you'd probably get even better results by putting gold fish in the bags of water to provide movement that would further put the Fear of God in the flies.