How to make layout batter boards for shed level without rotary laser?
When using a water level like you have, you need to make absolutley sure there is no air trapped in the middle. I used a water level for laying out the batter boards for the foundation work of my home. I set a stake approximately in the middle of the floor plan, after I hung the water level in the air with the open ends bundled together and corks in the ends. Left it hang there for a while. If the water level was just filled and there is a bunch of tiny air bubbles in it, thy need to leave. I don't know why, but whenever air was trapped in the tube with the water I got a bad reading. Make sure the only air in the line is in the ends!!!

Back at the layout. Drive all your stakes, just like you have. Strap/tape the water level to the center stake and pull the cork leaving the cork in the end you are operating. This part of the the level must be as plumb as you can get it set to the stake. Tape it at the top, and neat the bottom, NOT kinking the tube. Vacuum will keep the water in place. Also have a mark on the center stake that you can see from a distance and an appropriate height, whether it be the top of foundation, top of piers or even if it is a reference point.

To start marking the batter boards, set your water level your best guess to level with the mark on the center, and pull your cork. Set you level marks on all three boards at the corner, and cap the pipe, move to the next corner, doing the same process for the other corners.

That should get you accurate.