Hey stephenm2 - As you get into winemaking,
this book serves as a really good primer for the beginner and experienced alike.
To address your questions, the merlot probably will be pretty close to where your sugar and acid level needs to be. Definitely do not want to add water since it will thin out your flavors and acid even more. The sugar/acid depend on the ripeness at harvest time and growing season climate, so it is impossible to predict right now. You'll definitely want to get an acid testing kit so you can measure the TA (titratable acidity) and it would also be very good for you to know the pH which means buying a pH meter (test strips are not accurate enough).
The tartness you taste is the TA and this is what you adjust if needed. The pH affects the chemical and biological processes and you want to be sure it is in a good range so as to prevent spoilage risk.
If you end up having to add acid, then tartaric acid is the way to go. Don't use malic or the acid blends. This way you can put the wine through malolactic. Note that the malolactic fermentation will also reduce the acid a bit and raise the pH some.
You mentioned tannin in the title of the post. You can control the amount of tannin by the length of time you allow skin contact. Just to give you a starting point, fermenting on the skins for 3-4 days will give you a medium bodied wine but if you want a heavier tannin profile then a full week is needed. Be aware that the wine will soften as it ages, so what seems harsh when it's young will end up tasting softer over time.