Answer to: Where is the smart cover magnetic sensor located?I don't think there's any. It's not like paperwhite.
Answer to: Why won't my backlight work?Rex eats clowns for breakfast
Answer to: Why won't my backlight work?If you can see text on the screen that means LCD is fine. LCD is backlighted with LEDs or CCF, this light needs power. With LEDs, the component that supplies power delivers a constant voltage (arround 3V) and PWM intensity, you should find it on a schematics. With CCF, the voltage is arround 300V, it's a fluorescent light, but intensity is very very low. I think you've got a LED backlight and the component used to deliver intensity has been destroyed during immersion. You can try to supply the screen directly with a battery but you must insert a serial resistor to limit ntensity drop. This will permit you to know if a solution can be found, later you'll have to replace the bad component in order to recover display features such as contrast or intensity.