The following things are required in order to use your custom map.
1. - Complete your custom map using
mapgenerator (shameless plug!) or any other mapping prog.
2. - Copy the created mapX.mul, staticsX.mul and staidxX.mul (where X stands for 0=fel etc) files to:
.a - Your server emulator map directory and edit the config file to specify the path.
.b - Your Ultima Online instalation directory, in order to se the actual map when launching the client. Make sure you backup the original OSI files in case you need them later.
Here is a link based on RunUO:
http://www.ryandor.com/forum/viewtopic.php?t=2062
EDIT: The reason you end up on water is most likley that you have not yet completed step 2.b
Your server is running the map, but your client isnt.