I was incorrect about free water being the cause of cavitation; Now, I don't have any idea where I picked that up at. The Bosch book's statement on cavitation leads me to believe that it is caused by the design of galleries and passages in the pump.
Here is a scan of the page from the Bosch book discussing cavitation in IPs (caution, file is 1.1 mb).
Cavitation in diesel injection pumps.