Yes, well water should be fine, I wish I had one!
When raising larvae it's perfectly normal to have a few deaths, even if the conditions are perfect. Some of them can hatch with congenital problems and just don't thrive, even if they look normal. Remamber, in the wild very few of the eggs the female lays will make it far enough to morph, fewer still will survive to adulthood, so I wouldn't worry about losing the odd one.