The Mishna says that after the name has been erased we force her to drink. Rashi writes (based on the gemara 19b) that the reason we force her is because we assume that she is really innocent and nervous that the waters will kill her anyway. The Rambam also implies this because immediately after the Rambam writes that we force he to drink, he continues by writing that we explain to her that if she is truly innocent the waters will not effect her at all.
However, Tosafos quotes from the Yerushalmi why we force her to drink:
למה? שגרמה לשם שימחק
What does this mean? A. By drinking the water it will retroactively fix the issur of erasing Hashem's name in vain [we already showed from rashi 7b that he rejects this idea). B. We punish her by forcing her to drink for causing us to erase the name of Hashem (if this is true then we should even force her to drink if she admits her guilt). C. Tosafos just brought a Braisa in the yerushalmi that the water has kedusha, presumably because the name of Hashem has been erased into it. Therefore if she refuses to drink we will have to spill out the "holy water", therefore we force her to drink to prevent having to spill out the water.
Tosafos also quotes from the Yerushalmi a machlokes between Beis Shamai and Beis Hillel regarding how much of the megilla (specifically the name of Hashem) has to be erased. Both seem to understand that they don't have to erase the entire megillah. However, the Minchas Chinuch points out that the Rambam (sotah 4:10) who says:
נשאר במגילה רושם כתב ניכר פסולה עד שימחוק יפה יפה
implies that the entire megilla must be erased in the waters. The gemara which implies that we need the entire parsha of Sotah to be written without kankantum so that it is erasable, implies like the Rambam because otherwise their should only be a concern for a few letters of the parsha not containing kankantum.