You can buy it from the Grand Exchange. You can get them from the Grand Orb Project. Also, some NPCs sometimes drop talismans (including water talismans), for example, the water wizard south of Falador.
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Bring a water talisman, a plain tiara then go to the water altar, and use the tiara on it, you will lose the water talisman, but you will obtain a water tiara.
If you are asking how to make a normal tiara into a water tiara then it is simple. You take a water talisman and a normal tiara into the water alter. Use the talisman on the alter and it should make the tiara into a water tiara which allows one click entry to the alter and one more rune spot to craft.
kill things like goblins or jsut buy it
Yes, the only talisman shop that sells them is located in the runecrafting guild. Although they do not sell blood. You buy them with guild tokens obtained from the mini-game there.
You can buy it at ge or you can do the quest calles rune mysteries so you can actually craft runes.