If you have ordered waters in your structure, DOCK3.7 can use them, but you have to add hydrogens 'manually' using some visualization program and your intuition. Once this is done, make sure your PDB file looks like this:
ATOM 3662 O HOH A 508 18.556 19.072 63.314 1.00 44.77 O ATOM 3663 H01 HOH A 508 17.624 19.004 63.503 1.00 44.77 H ATOM 3664 H02 HOH A 508 18.960 18.206 63.383 1.00 44.77 H
Note the atom naming, it is important to use exactly these names. Once you're done, proceed as normal with protein receptor preparation.