This is largely a myth. It would only apply to large cities, and then, the fresh water sources were frequently protected by law in cities.

Alcohol itself doesn’t actually destroy the pathogens in question- booze was made by microbes, after all, and as for bacterial… only beer and liquors was boiled, and simply adding it to already-contaminated water wouldn’t make it safer; since that only happens at much higher concentrations of alchohol than you’d find, even in liquors. It does inhibit bacterial growth, though, usually people were mixing booze into water to make things taste better. (Similar to how modern restaurants will frequently add lemon slices to cover the taste of tap water.)

in terms of maintaining hydration, alcohol- even weak alcohols- are very much not good for that, even 3% alcohols, particularly in high-heat or under activity.

Boiling water was discussed in Roman and Greek writings well before the medieval period, as well- mostly in the context of making it not taste funky; and usually they were talking about filtering it to remove contaminants (for example, near mining operations.)

Again, streams rivers flowing were generally safe for consumption and would only become unsafe as a result from urban pollution, of which, there were controls in place to protect at least some water ways and wells.

And it was way tamer than what we commonly drink now.