Hi Randi - yes the pump is water tight and goes in the bottom. Yes you use that piece with the screw to hold extra water but also fill the whole thing with water the first time and when you clean it. It holds allot!! I fill the basin until it is about one finger width from the top. It also needs refilling (for me) every day but then, I have five cats who all drink from it

Oh and the pump may takes a couple minutes to get the water up to the waterfall...