You need to fix the water problem First, then you can address any other problems. Lack of water will stress the grass and cause other things to happen. How much are you watering? Don't tell us the amount of time, tell us how much water how often, like 3/4" twice a week. Time is irrelevant, I water my front yard (my only St Aug) for 2 hours, but that is only 1/2" of irrigation, so you see time does not tell how much water you are putting out. Put some tuna cans (or small rain gauges) in the dry areas and measure how much water they are getting. Once it starts getting good water and recovers, then we can address if there are any other problems that need addressed.