So I have MMM and OOO installed. When going into the water, I don't see any fish around. However, after swimming around for a bit, suddenly groups of dead fish and rats spawn around me and float to the top. Has anyone run into this issue? Not sure what to do about it.

Update your Diverse Waterlife to version that is posted in POST 3 of MMM thread that should fix the dead fish problem,

unless they are getting attackked by a hostile fish.

The water rats if in shallow water I can understand how they spawn in that, but, they should not be spawing in deep water with fish

So post your load order has well.

It is not uncommon for more hostile animals like slaughterfish or sharks to attacks more docile animals like small fish and stuff. OOO and MMM give a much more immersive and realistic ecosystem by these elements because you know that you aren't the only killing machine out there.

I'll try to find that new version. It can't be the hostile fish since they're dead as soon as they pop in.

Here's my load order:
Part 1: http://dl.dropbox.com/u/2978478/part1.jpg
Part 2: http://dl.dropbox.com/u/2978478/part2.jpg

Edit: Well, I downloaded the patch, but I still seem to still have that problem

next time please post your load order from wyre bash (right click the header tab and click list mods)

In testing the patch:
Did you wait for that cell to respawn? or Go to a cell away (at least 3 cells distance) from where you are?