Usually the recycled waste-water is send in to the rivers.
The fresh water usually comes from dams, ground water or river bank filtration (you don't suck out of the river, but from a well right next to it, so it get's filtered by the ground in between).
The water from the dams tastes really really good. The one from the big river (at least in my town) is very rich in minerals, not exactly the tastiest, but perfectly fine to drink too. The minerals build up in water cattle though and are annoying to clean off.
German tap-water is usually cleaner than german bottled water I think.
In the warmer parts of europe water is often is chlorinated I think, wouldn't want to drink it.
I didn't read the article, but I'd be afraid of purely recycled water. I know the fish have problems because of contraceptives, which are hard to filter out and in Great Britain there are traces of ataractics even in the ground water.
Before you get all high and mighty with your anti-americanism, check your facts.
A lot of water has such a heavy chlorine smell and taste, I can't drink it - same goes for US soft drinks that are created with tap water, can't drink. There is practically no smell or taste in German tap water [0].
[0] I might be biased and not taste it any longer because of growing up here
Sure, the wastewater gets treated to be extremely clean, but I think it just gets pumped into rivers.