Leaning towards DSK.
By his own admission, Sonic's punches and kicks don't do anything to Hydrated DSK. Any non-critical damage could be easily regenerated from as well.
Sonic has no significant durability feats if I remember correctly, so his durability must scale off of his AP, meaning DSK is most likely strong enough to defeat Sonic with just a few blows given the difference between them.
DSK is fast enough while hydrated to keep Sonic on the defensive, and came very close to catching him before, he most likely could actually do it eventually, and DSK has a great lifting strength advantage, so if he catches Sonic, he can and will easily crush him just like he attempted to do in their first meeting.
If DSK can get a read on Sonic's movement, which shouldn't be too hard since they are very close in speed and he already nearly caught him before, showing that he can do it, he can use his acid spit to hit him. That acid which easily melted through Genos practically as soon as it touched him, will even more easily eat through Sonic. He could also potentially use it to destroy Sonic's sword, in which case Sonic would have next to no chance of winning at all.
It would be pretty hard to hit Sonic with it though, even if you know where he's moving he can use his acrobatic skill to avoid the spit. Still, it provides DSK with yet another threat against him.
Genos' incineration cannons did little damage to DSK, so I doubt Sonic's exploding shurikens can do much.
Using smokescreens won't do much for Sonic either, DSK has enhanced senses that allow him to sense the presence of others, so he shouldn't have a problem.
Unlike Flashy Flash, Sonic isn't any stronger on his profile when using his weaponry, which maybe should be changed but I personally agree that he likely isn't much stronger. So even with his sword I don't think he'd do that great.
Considering all of that, I feel that it's a pretty strong victory for DSK. It just comes down to a matter of when will DSK hit him or grab him. Sonic can avoid him for a while I'm sure, but he's gonna have to get in close and risk getting hit or grabbed if he wants to fight back with more than shurikens/kunai which will be mostly ineffective. Sonic is a bit faster but they're close enough in speed that DSK will surely be able to catch him eventually, and he only needs to do so a couple times to win.
