Background:

1) when a water source block is placed, it will flow around in a radius. however, a waterloggable block prevents water from flowing into itself.

2) 2 water source blocks separated by a single block flow together to form a water source block at the location.

Bug: When two water source blocks are separated by a waterloggable block, a new source block will still be created inside of the waterloggable block, even though water isnt supposed to be able to get inside of the waterloggable block from the outside.

Recreating the bug (illustrated with provided image)

1) dig two 3x1 trenches. inside one of them, place any waterloggable block in the middle, for example a fence.

expected outcome: nothing happens.

real outcome: expectation is confirmed.

2) place water in one of the corners in both trenches.

expected outcome: water spreads across the entire trench with no waterloggable block in the middle, but in the other trench, the waterloggable block prevents the water from flowing further.

real outcome: expectation is confirmed.

3) place water in the other corner in both trenches. 

expected outcome: in the trench with no waterloggable block, two water sources flowing freely create a third water source in the middle of the trench. in the other trench, the waterloggable block in the middle of the trench prevents two water sources from meeting, thus nothing will happen.

real outcome: expectation about the first trench is confirmed. however, the waterloggable block didnt prevent two water sources from meeting and a source block was created inside of the waterloggable block.