I don't think any kind of dilution will work. The water in your mustard jar is a lot more like mustard with the solids filtered out than mustard with extra liquid added. It's roughly in equilibrium with the mustard itself, so it's nice and full of all the mustard aromatics. If you add water, you reduce that concentration, and get something much less flavorful. If you remove the solids, well, that's what pretty much exactly what already happened in your jar.
So... if you want to make it out of pre-existing mustard, you could try to remove the solids, perhaps by squeezing in cheesecloth. Of course, that's kind of wasteful; you'll end up with a bunch of too-dry mustard.
If you want to feel a little less wasteful, you could try making your own mustard-infused vinegar. It's still going to be kind of the same thing - grinding mustard, infusing in vinegar (along with salt, sugar, etc), filtering out solids - but at least it'd be cheaper to start from whole mustard seed than from pre-made mustard. If you go this route, you could probably use any homemade mustard recipe as a starting point.