I am creating a rectangular reservoir and need water levels to be able to change. When I move the water, the objects become distorted and slanted (I have added pictures for reference). This issue is not present when using an isometric view, but I have to use this side angle and can not figure out how to keep the water angle level. Is there a way to solve this and keep the reservoir at the current angle?
You are just squishing the shape by distorting it. Instead, select and move the nodes of the shapes you made.
If you construct this using a transparent blue shape, and a parallelogram the same as the top of the tank, then you could select both pieces with the Edit Paths by Nodes tool N, then use the tool to click and drag to select the nodes you want to move. Then you would be able move them up or down using the arrow keys. Alternatively you can also hold down Ctrl as you click and drag to constrain the movement vertically.
Here's an example