Putting medication in water is never a good idea, as it is very difficult to monitor how much (if any) the bird is taking in. It also can cause a bird to stop drinking its water if the taste or color is upsetting to them.
If you must sneak medication, I would mix it in with a small amount of preferred, wet food (such as plain oatmeal, sweetened with mashed bananas). That way, you know they have eaten it all.
Are you sure that the vet is a CAV? It is odd that they would only know large farm birds..
Did you call them to ask about the petroleum jelly (even if they aren't a CAV, the internet isn't always a safe bet)?
Did you consult with the vet before stopping the pills?
You must always finish a medication's course (unless advised to do otherwise by a doctor or vet)....If you do not, you can actually make things much worse...
Also, are you sure that the water was molding? A few hours is nothing...I have a hard time believing that visible mold could germinate in that amount of time.
Finally, what other ingredients are there in this transparent lipstick? There are specific creams out there for scaly-mites and I haven't heard of this petroleum jelly method (it may be legit, but it makes me very nervous, as petroleum is a chemical and it could easily clog the bird's nares)...In addition to my concerns about the petroleum, I worry about the additives in the transparent lipstick....Cosmetics (even lipstick) often contain unsafe chemicals (even for people). Additionally, just because something is safe for people, does not mean it is safe for birds.
Info I found:
https://www.merckvetmanual.com/bird...-of-birds/injuries-and-accidents-of-pet-birds
"
Do not use salves, ointments, petroleum jelly, or other thick or oily substances on birds without veterinary recommendation."
I see where there are some sources saying that petroleum jelly can treat the issue, but they don't appear to be very reputable...Again, I could be wrong, but I think a vet needs to be involved (preferably one with parrot experience who is a CAV).