Purified water

Purified water is water that is completely free of radiation and so it can be safely consumed without harming the player. In addition, it also heals far more than dirty water does by awarding 20 HP instead of 10. It's relatively rare in the Wastes, but can be requested from Wadsworth or Godfrey inside My Megaton house or Tenpenny Tower Suite respectively, at a maximum of 5 per week.

Purified water can be given to Micky outside Megaton, Carlos outside of Rivet City, or Willy in front of Tenpenny Tower. You can exchange a bottle for positive karma; this introduces the possibility of infinite good karma, as none will ever stop asking for more water.

There also seem to be random occurrences in the wastes of water beggars. If you deny certain ones water they request to be shot in the head (for negative karma, of course...just not for denying them sustenance). In another random occurrence, you may encounter two groups fighting over a fridge stocked with 10 purified water bottles. You can leave them alone, kill them and take the water, or with a successful speech check, convince them to split the water with you.

There is also another random encounter which involves two wastelanders requesting you kill a radscorpion guarding a refrigerator with about 7 bottles of purified water. They will then allow you to take all the water.

Fallout: New Vegas
When playing Hardcore mode in Fallout: New Vegas, purified water is a more refreshing drink than alcohol or soda.

Drinking from a Purified Water source (Such as at the pumps at Goodsprings Source) removes 200 points from the Dehydration meter.

Bugs

 * Sometimes when dropped the bottle can fall through the floor and resurface somewhere else, or just disappear (Fallout New Vegas).