Question: I know there is a fallacy in this, but I can't spot it
What is bending water out of your own hands? Is this a unique talent performed by a certain supernatural being in a specific context at a certain time - because it doesn't seem especially impossible or even extraordinary. Either way it would be a matter of physics than biology. We "bend" water with our own hands all the time in a swimming pool, sprinkling with our hands, or simply swimming, so the claim is insufficient, and therefore meritless.
The description "your book" is meaningless, as well, without knowing the subject, title, genre, etc. If by "your book" you're referring to Stephen Hawking's Theory of Everything I should think it warrants further investigation. If however the book is Maurice Sendak's Mickey in the Night Kitchen, well then, we might dismiss it as poetic license.
Person 2: "we can't go back then and find out, so we can't assume if this is right or wrong, therefore it can't be used as an argument against my belief.
Who said anything about going back? To when, or where? And what does this have to do with bending water? This is a classic red herring as it is a distraction and has nothing to do with the physics of bending water, or the book that claims it as a miraculous event. We needn't go anywhere or read anything to determine whether one can bend water with one's own hands. To answer it we need only define the parameters of the experiment, model, rules and probable replicability. In other words, the scientific method.