Can elephants smell when they have water in their trunks?
Yes they can, as the G protein-coupled olfactory receptors detect presence of molecules and no receptors exist that are inhibited by competitive binding of water molecules.
Both you and an elephant can smell (with) water in the nose! Just try it! I am sure you can smell a difference between pure water and water with a tiny drop of perfume in it if you aspirate it though your nose!