RAW, it seems you quoted the relevant part of the rule already.
Destroy Water. You destroy up to 10 gallons of water in an open
container within range. Alternatively, you destroy fog in a 30-foot
cube within range.
The serpent form is not water in an open container or fog, and again RAW, should not be subject to damage from the spell. Spells don't generally do more or less than they say.
That said, this also seems entirely in keeping with the idea behind the spell (the spell destroys water and the target is water, a stretch but not by far), and D&D 5th Edition is by design more open to DM interpretation than previous editions. This seems like a case of the DM deciding to reward a player for creative use of their abilities, and s/he resolved that use appropriately.
Allowing you to target a person makes the phrase meaningless
What is a "container"? Merriam-Webster says,
a : a receptacle (such as a box or jar) for holding goods
Is a human a receptacle for holding water? The wording of the definition suggests that there is some intent--that the object is intended to hold water, in this case. Do people keep humans around to hold water? That seems unlikely.
However, let's say that humans are valid "open containers". Then, what is not an open container? Sure, the human's blood is "open," in some sense, but the vast majority of it is still inside the body. If we say that the wound makes that "open," then basically any gap is "open". Therefore, literally everything that has any water in it is an "open container". Heck, why use the level 4 spell Blight to kill plants, when plants are "open containers"?
Finally, consider game balance. Should a 1st level spell be an instant kill on any humanoid that's taken damage? Probably not. You can often do crazy things with magic in D&D, but it is ultimately a game, and not a physics simulator.
Best Answer
Create or destroy water doesn't do that.
The spell description of create or destroy water states (PHB, p. 229; emphasis mine):
It makes it rain, which does zero damage.