Hi,
With regard to water, I don't worry about it very much. First, I only make up enough solution for the gun I am working on and I first just use my tap water (from a well). My water has iron in it and I believe it enhances red tones in the stain. However, I don't always want heavier red tones so I might then mix the FN with distilled water. For me, the secret is that I tailor my stain to the wood at hand and my color and finish objectives, and I test the stain on scraps of wood from the stock. For every gun I build, I have a scrap of wood striped with different FN stain solutions and also coated with my finish.
dave