I have free wheeling diode on the MOSFET. I have the mosfet ouside the circuit connected with a wire because it is water cooled.

 

Your layout lacks the thermal pad under the chip. You should add it and connect it with multiple vias to GND plane to dissipate heat.

https://www.renesas.com/us/en/document/dst/isl55110-isl55111-datasheet

 

I think there is oscillation or at least ringing on the input or output of the Gate Driver.
I have seen the power FETs oscillating which causes many things to run hot.
Just adding more things to the list of possible problems.

 

Is this even a genuine chip or is this some rip off copied part from Ali ?
Genuine chips have a thermal pad which will solve the problem.