Hmm,
strange, and since I don't have XP installed I can't even try it :-(
Anyway, regarding the starting situation being "in water" it might be due to the fact that you did not load scenery tiles for that area. When you install XP11 you can choose to install only partially the World Scenery, by regions like Europe, Africa, Asia, Australia, Siuth-Center and North Americas...
Are you sure you installed Europe?
Do you have the XView Manual v1.2 ?