I'm trying not to be dogmatic over this one, because 'perception' is important - both the querent's and the astrologer's. However we have to recognise that Bird is not human. He's a 'small animal' and we have to have very good reason for not using the sixth. Personally, I'd also use the fourth because he is a 'treasure' but if I were getting desperate, I'd try them all!! I certainly would do that if I were the owner and I'd look everywhere till I was unable to think of anywhere else.
On the issue of Water - my chart has Bird in a Water sign, Cancer. So I would indeed look for water. Cancer is the sign of the sea shore, and indeed the river bank, or lake bank - so the shore line might be worth investigating. In terms of distance, I agree that Bird probably got further than we Willowfox has been able to check. On my chart he lies 'east' now that could be the east bank of the river, or it could be some other water that is east of the road.
Yes I agree the eight of itself does not mean Bird is dead. I've mentioned two or three times that Bird has passed the 'alive' test, using the sixth (but sadly not the fourth).
'Lost' items don't have a dedicated house. For lost movable possessions it's the second, for lost treasure it's the fourth, for lost small animals its the sixth and for lost large animals it's the twelfth. A fugitive (who is by definition 'lost' (by the forces of the law) is the seventh and a lost spouse would also be seventh and so on.
Being placed in the eighth could mean a lot of things depending on whether the lost item is lost inside or outside the home. The eighth generally has to do with 'elimination' so that could mean next to a water outlet or waste pipe or sewer and sadly it might also mean lost completely.
One last point for the moment - my chart has Bird in the first, according to Lilly if the lord of the sixth is in an angle, then the 'beast' is in 'a pound or a close or in the house' That could mean that Bird has been recovered by the police or an organisation, such as an animal welfare charity' or even an individual. You might check whether there's any such organisation locally. That might explain why I get 'alive' readings and Ronia gets them but Bird is not found and a fair amount of time has passed.