The problem with hydrogen-fuled cars

[Coelho]

I heard that water could be used to manufacture hydrogen.
So let me get this straight. You can derive the hydrogen from water, then it also makes water as the waste product?

Yes, its exactly this.

So couldn't you collect that water and maybe even have something built into the car that converts the waste water back to hydrogen?

Well... its possible, but its not useful. This cars burn hydrogen to get the energy that makes it move, like the usual cars get their energy from burning gasoline.
This process of burning generates water, that can indeed be used to make hydrogen again. But it needs energy to be done. The energy that the hydrogen generates when burnt comes from the energy you must give to the water to turn it into hydrogen.
So, we can say that hydrogen is just a thing that stores the energy given to water during its decomposition (to transform it in hydrogen), and releases it when its burnt.