i. Yes, there is a relation between the reflection of light and blurring of the images.
ii. Initially, the water was still and its surface was smooth. Thus, regular type of reflection was taking place from its surface i.e. all the light rays coming from Swara's body or Yash's body reflected in the same direction on hitting the water surface and reached our eyes. Because of this, we saw a clear image.
But when Yash threw a stone in the water, the water surface became rough due to which irregular type of reflection of light occurred on its surface i.e all the light rays coming from Swara's body or Yash's body reflected in different directions on hitting the water surface. Thus, only some part of the reflected rays reached our eyes. Because of this, we see a blurred image.
iii. Yes, laws of reflection are followed in both the types of reflection.