Hydro is a name belonging to a comic book character from MK who could control water; he was a Lin Kuei ninja, so I don't think you could use that name legally... Also, your character bears a strong resemblance to Silver the Hedgehog.
Also, his hands are too small and he looks too thin and scrawny to carry that giant sword on his back, and his head's way too big, especially for that tiny mask he is holding.

I can tell you without a doubt, from what I know, that he will not get sued for making a character which is nearly identical to Hydro, even if it has similarities in character naming, stories, and move design. I was in this situation once, and learned a lot of copyright stuff. He can even sell it. Just don't make mention of, or completely base everything on, Mortal Kombat's Hydro.

Also you could, by using names that are similar, claim you are using them as parody, especially using a very identical head of Silver the Hedgehog. Which, under Fair Use, gives an added layer protection to your work. Again, you could STILL sell it. Parodies can be sold without permission from their creators.

Other than that, I don't like the concept personally. I'm not fond of Hedgehog ninjas.

Jerrod, I beleive you are reading too much into the creator's fan art. After all, he is not selling it off saying that the original Hydro is his own character and the style is all his own.

I beleive I'll give this a 3/5 as the hands indeed are too small and the head is too large.