When its red use the pliers to to grab the iron using
again.
Then walk to the big water barrel.
Ones again push
to water the iron bar.
If the Iron bar turns green that will mean that you did water it to much and has cooled down.
so you will have to start over from the beginning.
After that go to the black anvil
and push
A window will popup.
Click the water can
and then the hand with the hammer
to craft the watercan.
When its done you can pick it up push
to grab it