Apple Watches are not water-proof, they are water-resistant. They have water-resistant seals that over time, depending on what the watch experiences, can be damaged
About Apple Watch water resistance - Apple Support
The series 7 has been around for going on three years. The seals on yours could have been damaged in that time.
If it was water damaged it is likely time to replace it.
You should be able to remove it from your Apple Account with these steps;
- Go to www.iCloud.com/find
- Sign in with your Apple ID, email address or phone number, then enter your password
- Select the watch
- Click Erace This Device
M1 Mac mini, macOS 14.6.1; Watch, series 7 GPS/cellular, watchOS 10.6; iPhone 12 Pro, iOS 17.6.1; TV 4th Gen, tvOS 17.6; HomePods, audioOS 17.6 and Airport Express w/ Airplay 2