Code 7 from the led/sw on the 16 pin diagnostic box simply codes that there is a fault in the ignition .
The specific ignition code of knock sensor circuit would be code
So that can mean any ignition fault, from a bad plugs, coils , etc to a shorted Wire Harness [ might want to see if that has been changed]
Your car is Distributorless ignition and has 3 coils. [ each fires 2 plugs at once].
Because you mention engine vibrations, you may want to check
the plug as one bad can effect 2 cylinders [ symptom-shaking, misfiring eng. and code 7]
I also noticed you questioned if this could be water related.
Did you just clean eng with water?
The reason I ask is that the 104 engine has the plugs/wires
mounted in the "V" of the head between the cams and they are suseptible to water ignition shorting as the water goes right down to the plugs and can't get out. If that is the case [ just guessing here from your info] . pull the top cover for the plugs/wires, dry it out , reset the 7 code and give it a try. While in there, I would check the wire harness for bad insulation.
If you do have ignition module problems , then a scan for codes can be done to narrow it down, but the led you are using only
brings up emmission faults in general and pops the CK Eng lamp.
It does not go into each system for in depth diagnoses. That
is what the other 16 sockets are for .