I'll have to check the manual on distilled water. I don't remember reading anything specific to water. I can't imagine tap water is harmful, but then I don't hold it in my mouth for 2 years.
I believe the cooling system takes 11-12 liters of coolant depending on the car.
Redline Water Wetter is good stuff. Redline recommends no more than 20% coolant when using Water Wetter. Most folks who write about it say they continue to use 40-50% coolant which by Redline's information makes Water Wetter ineffective. I've had a bottle of Water Wetter in my trunk for 6 months waiting for me to decide which way to go
86 300SDL (due soon)
81 300SD (for sale cheap)