Dear Saad,
The swap water molecules are supposed to overlap with the ligand. This is how the method works (it swaps the ligand with an equivalent volume of water that occupies the same volume). The issue is that the swap water molecules look like they are overlapping with the protein.
I've looked at the bound_mobile_001500_0.00500.pdb file and the swap water cluster does look weird. This is because you have a long, thin ligand. The swap water algorithm performs poorly for long, thin ligands. Ideally the swapped water should form a dense cluster that fills the same volume as the ligand. In your case, the swapped water molecule has spread out and is not sitting underneath the ligand. You can see this in detail by comparing a VDW representation of the swapped water molecules with a VDW representation of the ligand. Ideally they should overlap well and all of the swapped water molecules should be hydrogen bonding to each other. In your case, the swapped water molecules have broken up into three clusters, with too few on the left and bottom in the attached picture, and too many water molecules in the top right (which forces the water molecules to be too densely packed, and hence overlapping with the protein).
This has happened because the automatic method of placing identity atoms is very simplistic and doesn't work well for long thin ligands. You will need to decide on how many swapped water molecules to use manually and place them manually. You place water molecules onto atoms using this syntax in the config file;
identity atoms = ['N2', 'C4', 'C24', 'C20', 'C18', 'C16', 'C13', 'C10', 'C9', 'C6', 'C1', 'N6', 'N5', 'N4', 'N1']
If the config file is called "config" then you can pass it to waterswap using "-C config" on the command line. You should use the names of the atoms in the ligand on which you want to put identity points, so the above config line says to swap the ligand with 15 water molecules, using atoms N2, C4 etc. etc.
Best wishes,
Christopher