I can't imagine where the name first came up, but it's a fairly common name for a water elemental/spirit/what have you from a great many RPGs. This could be the basis for using the name (fluidic space).
As to pronunciation, the most common way I've heard it is "oon-deen," however this is generally from video games from Japan, and therefore may have a slightly different pronunciation. Most of the dictionaries I've looked up have it as "uhn-deen."
Edit: a wikipedia search for Undine suggested Ondine (it did state that the two are fairly interchangeable), which are apparently water elementals from various European mythology.
In Teutonic folklore, undines are female water-spirits who like to associate with humans. They often join villagers in their dances and merry-making. An undine was created without a soul, but by marrying a mortal and bearing him a child she obtained a soul and with it all the pains and penalties of the human race.
From Websters dictionary:
A female spirit or nymph inhabiting water