OP, from what I can gather this is a complete and total myth. I started hearing rumors of water in lungs leading to pneumonia and death in Europe and Israel about 2 years ago when I was there. Those who told me said it was a friend, or a friend of a friend, or "it was in the papers". I could not substantiate a single one, including when I was told exactly which paper it was in.
I'm not surprised the urban legend has spread. But it's just that, a legend. If there were a single death, it would have been plastered all over the news, no matter where it occurred.
I have had the misfortune to spend most of the last year and a half in hospitals (both of my parents passed away). I openly vaped in all of them and had some very frank conversations with many health professionals. Some were very ill-informed. But I WAS able to get out of all those I asked that they've never seen a single patient hospitalized for vaping. A battery injury here and there, all minor, but no hospitalization.
I can, however, remember my first attempts at vaping. Inhaling deeply on a freakin' cig-a-like felt like I was choking and felt like I was getting water in my lungs. Why? Because vapor it moist, not hot dry smoke. It is, however, a sensation that you quickly become accustomed to the point of not even recognizing it from "the old days". This is probably what your friend is talking about.