Is it possible to install a watercooled turbocharger on a 1983 900T to replace a non-watercooled turbocharger? I am having trouble finding a turbo to replace the original and thought it might be easier to find a newer watercooled one.

Yes you can.

Simon.

Same situation as OP, except into an '84 900T: does the watercooling HAVE to be hooked-up, or can I keep it simple and just bolt on the unit as-is? ie: is the watercooling critical, or was it an added insurance to account for oblivious people that don't know they have a turbo. I use the best synthetic oil and always use appropriate warm-up/cool-down periods.
Thanks.