Caustics and Water in Mental Ray
This scene was created in 3DS MAX 2008 (previous versions on this website were rendered in Max 8 - many changes have happened since then so the settings had to be updated). These settings may not work for everyone, just what I found worked for me. I was wanting to get the effect you see in swimming pools, with dancing caustics on the inside of the water and bounced from the water.
This Flash video shows the caustic effect : Caustics and water effects in 3DS MAX using Mental Ray
This scene uses an A&D (Architectural and Design) Mental Ray material for the water. This is a simple semi-transparent setup but also using Refraction - Color at Max Distance setting on the Advanced Rendering Options to simulate the depth of the water and fall-off of lighting. The ripples are created by adding an Ocean shader to the Displacement slot of the A&D material. Putting the Ocean shader in the bump slot would also work but the water would not appear to move at the edges.
The basic settings for the A&D Water material are as follows :

Basic settings for A&D Water - note IOR set to 1.33

Select the By IOR (fresnel reflections) option
Key to the effect is setting the Refraction Color at Max Distance to give the effect of depth to the water :

Advanced Rendering Options for A&D settings for water in Mental Ray
The settings for the Ocean texture are shown below. The map is in the Displacement slot of the A&D Material.

A&D Displacement map for simulating water ripples

Ocean settings for simulating water ripples
The effect of switching on Refraction Color at Max Distance to simulate depth is shown below.

A&D Water texture in Mental Ray - Ocean as Displacement

A&D Water texture in Mental Ray with refraction max distance - Ocean as Displacement
Adding Caustics
To add the caustics we need to switch Caustics on and adjust some settings. These settings were found by trial and error - no guarantee these are the best settings. These will be processor intensive - the settings have not been optimised (created using a quad core).
Switch on Caustics and adjust the settings as below :

Settings for Caustics in Water using Mental Ray
The addition of Caustics using the above settings gives this effect :

A&D Water texture in Mental Ray with Depth and Caustics- Ocean as Displacement
Additional Settings in the above scene :
The scene uses a single mr Spot Light (intensity = 1.3), mr Skylight (intensity = 0.6) using a gradient ramp for a sky texture, mr Photographic exposure (Settings shown below). A glare shader is added to the Camera Effects rollout in the Renderer tab of the Render Setup : Mental Ray renderer window (F10).

mr Photographic Exposure control settings
Download the Scene file and explore - in Max 2008 Format - all textures included to generate the above animation.
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