Does HAMMER account for water present in the pump for inertia calculations?
HAMMER will take into account the fluid's momentum along the pipeline. The rotating fluid in a pump will contribute to the pump's overall inertia, but HAMMER does not make any allowance for that.
If you wish, you can include the inertia contribution (weight - WR^2) of any water entrained in the pump. However, a lower inertia from including only the pump and motor in the calculation generally results in the worst-case scenario in transient designs, so underestimating the inertia by omitting the contribution from any entrained water would often be okay.
Aside from this, the value of inertia you enter should account for the sum of all components (weight - WR^2) of the particular pump which continue to rotate and are directly connected to the impeller, as follows (taken from the Help topic "Pump Inertia"):
What are the units used for pump inertia, as seen in the Transient Analysis Output Log?
How does pump inertia effect the pump calculations during a transient simulation?