Don't quench in water. That is part of your problem. You can use several different things like motor oil, trans fluid, canola oil, vegetable oil, etc. It needs to cool quickly but not too quickly. Water cools it too quickly. As far as your warping, your edge is too thin when quenching. Leave your edge about the thickness of a dime, or a little less before quenching. This will cure the warping problem. Also, heat a scrap piece of metal and put it in your oil to heat it up a little, about 120 degrees, before quenching.
Mike