Is getting a little sand in your fly reel and setting it in water where water is covering the entire reel is this bad?

Only if you intend to keep and use it!
Seriously, reels aren't made to take that abuse. Disassemble it , clean it, and re lube it if you got sand in it. Take it apart and air dry it if it got submerged. And be more CAREFUL in the future. I have a spinning reel that I bought 45 years ago and it still looks and performs like nearly new.

The fly reel just has tht Floating line in it..I no ill have to get the sand out but will Water really affect it? and if i need to re-lube it where and how?

There should be a quick release lever right by the hub on the crank handle side of the reel. The spool will slide off the hub shaft and expose the spool hub and clicker mechanism for the drag (if you have one). Clean it out and put some grease on the hub shaft and some on the clicker teeth. Then just slide the spool back on till it clicks and locks back in place.

Wht kind of lube or greese? jst any or a certain kind for a reel?

Just about any reel grease should do the Job!!!! and ya Sand is a real bad thing in a reel!! waters not quite as bad!.