I assign submerged to my character during my building step. This character has a boot symbol on dial. I give this character nerkkods hammer that gives in the dolphin symbol. Does this character now have access to submerged? Is this all legal?

No.

The prerequisite to assign the feat to the character is that they have the dolphin symbol DURING your build step. The character should not have the feat assigned to them at the point that they get the hammer.

That is not true, in order to use a feat you must have the prequisite power showing. However you can assign any feat to anyone.

Seven, you are incorrect. A few years back they changed how Feats are assigned. You can now assign any feat you wish to any figure, just that you cannot use it unless you meet the requirements for said feat.

Completely legal then?

Well, to qualify to use the Feat you have to have the Dolphin symbol at the time of assignment, so no. Submerged would have no effect.

If a prerequisite power, ability, or symbol can only be used by a character through specific circumstances, then using the feat is limited only to those same circumstances.

This is the line causing the confusion.

This is my understanding of how it works as well.

As stated before, this is completely false. You can assign any feat to any character.
Use is saying when you actually utilize the effect.
Assign is when you build the team.
What you want to do is completely legal.
One of the more common uses of this is with AutoRegen and the Nurse or Angrir's Hammer.

Page 21 of the rulebook is where you can find the break down berween assign and use.

Guess I need to brush up on my Feat-fu. Haven't used 'em in a while, anyway.

Thank you everyone.

It worked like you said long ago, but a few years ago it was updated for simplicity.