Sounds like you have turned on the external cooling water prior to the engine being running. Without the exhaust pressure, cooling water is allowed to flow into the engine and saturate the lower engine block. This then gets sucked up in the 2-stroke cycle as if it were fuel and deposited into the cylinders. The owners manual has a warning about NOT doing this and it should also be on a PWC warning label somewhere near the external connection. The manual also cautions to turn OFF the water BEFORE turning off the engine. Of course I'm making an assumption here but the water has to be coming from somewhere.
The bigger issue now is it appears you have an engine block full of water. This means every moving part that requires lubrication has been saturated in water instead of the oil contained in 2-cycle fuel. You'll need to get all of that water out without damaging the crank, rod bearings and cylinder walls. I do not have an answer on to how to fix this new problem, but I'm betting someone has a video on how to resolve it.
As a side note, it is impossible to get an accurate compression reading with a liquid in the cylinders. The liquid could be masking compression leaks caused by worn rings or scoring in the cylinders. Dry it out and run the test again.
I can't over-stress how important it is to have a service manual and owners manual for your PWC. You can find one for free by doing a Google search.