Mark, surrounded by water, is prisoner (7)
I believe the answer is:
hostage
'is prisoner' is the definition.
(someone taken as a prisoner)
'mark surrounded by water' is the wordplay.
'mark' becomes 'tag' (tag is a kind of mark).
'surrounded by' is an insertion indicator.
'water' becomes 'hose' (water a flowerbed say).
'tag' put within 'hose' is 'HOSTAGE'.
(Other definitions for hostage that I've seen before include "Detainee - gash toe (anag)" , "Person taken as security" , "One caught" , "One held as security" , "Captive held for ransom" .)