I use the OSE books too, just cause I think they're easier to reference than the Moldvay books, and this is what my PDF says on combat in water:
So where my logic was was that, I gave a -2 penalty for Luban's attack (I thought about doing -4, but I fugured Luban already has a hand on the monster's antennae and is sawing, so it shouldn't be that hard to reach down and start sawing), and I would've probably done a -2 for the the damage penalty, but it didn't matter because the Giant Crayfish had an armor class of 4 (needed a 15+ to-hit) and it was down to its last Hit Point when it submerged so any hit (even Gilly's arrow) would have been a kill.
As far as firing ranged attacks
underwater, since my rules say
most ranged attacks don't work in water, I decided that probably a shortbow or long bow probably wouldn't work if shot under water because of the drag on the string? Probably any throwing weapon wouldn't work because you have to swing your arm for those. Down the road,
maybe a crossbow would fire underwater (we can discuss it), and a speargun would probably work (if a speargun ever comes up)...
As far as firing ranged attacks
into water, I don't think a dagger would work, or a throwing axe, because it would lose its balance and spin once it hit the water's surface. Anything like a long, somewhat aerodynamic shaft that just runs a straight trajectory would probably work, though with a penalty. I don't hunt myself, but I have a lot of friends that do and a couple use these crazy bowfishing rigs that let you shoot an arrow attached to a fishing line:

From what I understand, if you're shooting too deeply your arrow can go off the mark, but the hardest part is that if you shoot directly at your target under water you'll be off the mark because of something to do with how light refracts in water or some science, so that's a penalty to her to-hit that Gilly would have had to contended with...
As far as drowning, the OSE pdf says you'd likely have "above" 90% chance of drowning in heavy armor, but kind of leaves it up "referee's discretion". I
could go 99%, but figured, "eh... I'll throw them a tiny bone because I'd like to see them pull off a big win here". And honestly, 90% drowning/10% successfully swimming odds are hardly better than 99%/1% odds. I certainly wouldn't want to gamble on those odds if I could come up with a more clever way to circumvent having to make
that percentile roll. It was a very meager, very slim bone I threw you guys for sure.
Tying off another "sinker" like Mal and then fishing her back out was definitely a smarter move than letting Luban risk the swimming roll. As far as Thurig drowning down there, he's sorta already unconscious, and unconscious people can hang around the bottom of a pool and get revived without too much brain damage all the time if they're not under for more than a minute or two, which is why I want to just play this out using 10-second "encounter time" intervals, so I have an idea how long the dwarf is actually laying around unconscious without air before getting rescued.