I figured out how to make water in Poser 7 but I get the reflections right on the displacement so they look like reflections of an object on water but the shadows keep showing up like it's a flat plane.
What am I missing?

Transparency? Ray Tracing? You need ray tracing on to caculate where the light would fall, and if you are getting a solid shadow, you might be just affecting the water's color, not it's transparency.

Imagine a piece of paper with a picture of water on it.. if you looked under it, the shadow would be solid, not with water caustic reflections, and light bending refractions.

You need to uncheck Reflection_Lite_Mult on the root node of your water surface.

Attached Link: http://market.renderosity.com/mod/forumpro/showthread.php?thread_id=2634674&page=2#message_2639621

However, if i take you at your word, then I have to say you've got it all wrong. The surface of water is transparent, and its appearence is unaffected by light or shadows falling on it.

The shadows you see in clear pond water are actually on the ground under the water, not the water itself. There is no light interacting with the water directly.

A shadow falling on the surface of water does not impede its reflections, unless you're referring to specular reflections, which should be blocked by intervening objects.

Follow the link for a discussion of shadows in water, if that's what you're after.

Thank you all (the link was very helpful, I will work on this as time allows.