The most common and most likely answer to this crossword clue is the 5 plus 5 letter word ANGEL FALLS
I've seen this crossword clue in The Times
A
N
G
E
L
F
A
L
L
S
Buddy explains!
The straight part
We know that "watery South American location" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case watery south american location = angel falls.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.