This isn't really about the specific problem, just about the debate over whether or not water is safe. My ped (actually 3 of them in our group) said never give a baby who is breastfed water cause it can basically dilute their blood, and their kidneys can't process the water, and they can actually 'drown'. Not sure how that applies to formula fed babies, but if this baby is primarily breastfed then I wouldn't mess with water till I asked my dr.
DisneyPhD, it might be that the baby lost too much weight that she has to supplement. That happened with Madison, she lost 11% of her body weight at her first appt. which was 4 days after she was born. Her dr said that they don't like to see babies loose more than 10% of their weight so we had to supplement too. After 1 night of supplementing (she still nursed, but I did not have any milk so she was literally getting drops) she gained 5 ounces by the next day. I felt horrible that I was so caught up in trying to get her to nurse that I was starving her. All she did was sleep all day and scream when she woke up and the dr said the sleeping was her body trying to conserve energy since she wasn't getting any food. I would pump and literally get maybe 1/2 oz. total from both sides after 40 minutes of pumping per side. Once my milk came in 2 days later I would get 4 oz. per side in just 10 minutes of pumping so at that point we were able to cut out the formula.
Madison did poop with every diaper till she was about 8 weeks old or so, then she went to every 7-10 days, which I loved. But since your baby's was pebbly, I'd go ahead and ask the dr.