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There are a few possibilities 1) your resivoir tank is cracked and leaking 2) your sending unit is covered in gunk or corroded 3) your sending unit is defective and needs replacing 4) you are leaking coolant from somewhere (bad hose, bad gasket, bad joint, etc)

Water is an acceptable quick fix, and tap water is fine (that is what you flush it out with). Once your problem is sufficiently solved, I would recommend a complete drain/flush/refill of your radiator with the proper mixture of coolant.

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With the 5th generation Monte Carlos, when the overflow tank is emptied, and it kicks the sensor on, after you fill it up, the sensor may not reset or turn off and GM had problems with those sensors and they normally had to be replaced. It sounds like a bad coolant level sensor to me.

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Q: Why low coolant light wont go off in 97 Monte Carlo even after topping off coolant with water?
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