Can water created using water jutsu be drunk? The earth and wood style can create permanent trees and walls, can water jutsu create pond or smaller body of water to drink? Is there any instance of this in the series or manga? And where does the water came from.
I would say yes.

As chakra is a special matter that can transcend body pains (in Naruto story of Kaguya and his two sons, the elder brother relieved the pain old man who tried to thug people in name of fake medicine), so possibly the water made would be pure enough to drink, although it's never been mentioned in the anime.

Another proof is that during the Fourth Shinobi War, the arc in which genin exams were conducted in the village of the hidden sand. One group had the ninjutsu to create healing water in order to cure some mosquitoes bite.

So in that way, I can deduce that the water would be drinkable.