Continuity mistake: When Henry sneezes at the boys, you can see that the boys got ashes on them before the smoke has even touched them yet.
Continuity mistake: When Henry sneezes at the boys, in the shot of the boys with the smoke rising up, you can see that they already got ashes on them before the smoke had even touched them.
Character mistake: The narrator says that the passengers covered their ears at the station, but no one is covering their ears, except Sir Topham Hatt.
Answer: He was in the water.