The water wont just vanish. The coolant light flashing means you have no coolant in the expansion bottle.
It will be disappearing in one of the following ways:
- Boiling over (and dripping out of the side hole in the expansion bottle - you'd notice this!) This could be a serious overheating issue (i.e. caused by a stuck thermostat) or a pressure issue caused by a dodgy seal on the expansion bottle cap. Mine boiled over and the cap was
missing the seal

What does the temp gauge read?
- External leak. Either from one of the hoses/flanges or the heater matrix. Hose/flange leaks will be fairly easy to spot, do you get any drips on the floor when the car is warm? Heater matrix leaks either result in wet footwells or steam on the windscreen when the blower is switch on and put onto the "hot" position.
- Internal leaks. Check your oil filler cap and diptick for traces of mayo (water in oil). This is most likely caused by head gasket failure.