Preheat oven to 350 degrees F (175 degrees C). Grease and flour a 10 inch Bundt pan.
In a large bowl, combine cake mix, pudding mix, sour cream, milk, oil, water and eggs. Beat for 4 minutes, then mix in 2 cups chocolate chips.
Pour batter into prepared pan. Bake in the preheated oven for 40 to 50 minutes, or until a toothpick inserted into the center of the cake comes out clean. Cool 10 minutes in the pan, then turn out onto a wire rack and cool completely.
To make the glaze: Melt the butter and 1 cup chocolate chips in a double boiler or microwave oven. Stir until smooth and drizzle over cake.