I was just playing on a server when suddenly the owner said 'Awww, I don't think signs stop water anymore'. So I went to a small water hole and placed a sign and it removed the source, like normal. However, when I placed it on the flowing water, it removed that block, but the water continued to flow on the other side of the sign.
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Duplicate of MC-5770, please use the search function to see if your bug has already been submitted. Currently over 45% of tickets are being closed as duplicate.
That's a serverside bug, maybe some kind of lag or so. Or the server you are playing on is modded, which is unlikely, but not impossible, due to the fact, that the modding tools are updated already!