The water is most certainly the problem. Even though some of the 10xx series of steels are considered water quench types, especially 1095, every maker I know uses oil. For the plain carbon steels, again, 10xx, a fast quench is needed. When I used 1095, which is not a deep hardening steel, I found that a very light oil such as ATF would harden the blade just fine without cracking. Whenever I experimented with water and 1095 I got cracks. Brownell's Tough Quench also worked well for hardening 1095. For the 1080 - 1084 series, any good oil should do. The 1080 series makes a really tough blade when properly heat treated. You can use olive oil, peanut oil, mineral oil or even motor oil. My recommendation is to get a gallon or two of veterinary grade mineral oil. I get it at the local Cenex feed store. It works wonderful for 10xx, O1, 5160 or 52100, is very consistent and rarely flames even when doing an edge quench due to its high flash point. Your temperature is fine. I use 145 - 160 F for my quenches.