Combine mustard and 1/8 cup water in a small mixing bowl; stir until smooth. Set aside.
Combine sugar, cornstarch, and salt in a small saucepan. Gradually add remaining water, stirring until well blended. Add vinegar; stir well. Cook over low heat 5 minutes, stirring constantly. Remove from heat; set aside to cool. Add reserved mustard mixture; stir well. Serve over baked ham or on sandwiches.