PEX is the best thing out here, in my opinion-considering the installation time is 1/3 of installing copper water distribution lines. However- the start-up costs of buying the crimper tools, is prohibitive for the average homeowner who simply wants to install a water-heater.(The tools can be rented @ Home depot)
FLEX copper lines are easy to install betwwen the di-electric union, and the transition fitting from your existing copper lines.
Shark-bite fittings are excellent in this case.
I never bothered with 'yellow' teflon tape(white works fine)..but it may not have been an issue in my area.
Dont forget to put a thin line of 'pipe-dope' on the cup-seal @ your union.


If the tank is leaking from the bottom...(And you have ruled out it leaking @ the fittings)..the tank has to go.

__________________
CHILCUTT~
The secret to a long life. Is knowing when it is time to leave.