Hi JLB,
We understand that Jesus grew up in Jewish culture and Nicodemus was highly educated in Jewish thought which was to live out their spirituality. We see Jesus express this sentiment within the Lord's prayer when he teaches us to pray, "Your will be done, in earth as it is in heaven".
I realize you and I live in a culture radically different than the ancient of days. Also, you and I were not raised, nor are either of us fully aware of the teachings of Hillel to which Nicodemus, Paul, and Jesus were acutely aware of. As such, we enter into this conversation not fully understanding the backdrop to the discussion we are entering into.
Scripture states that Jews seek signs, gentiles seek knowledge. Because we seek different 'facts' than Jews, it is easy to see things the Jews put very little weight in.
From a Jewish mindset, you cannot separate the spiritual from the physical. Both work in harmony to paint a picture. Gentiles look at 'Or' statements such as spiritual or physical. Jews use 'and' statements such as spiritual and physical.
In regard to water baptism, Jews see it as both a spiritual and physical event and as
JohnDB has shown, the discussion between Jesus and Nicodemus is much broader than a single, modern day doctrine.
I understand you will disagree with this, and it is within the grace God has provided you to do so. I do not seek disagreement with you, but what I do ask is that we give each other enough space to share what we have learned without opposing one another.