I suggest replacing the planks in the water tank recipe with creosote blocks and removing the slime ball.

That is all.

(Possibly re-balance the output amount?)

This was mentioned over a year ago, but I countered with an actual wooden water pipe:
http://www.blackdiamondnow.net/.a/6a00e5513924e68833019affdb8ac0970b-pi

I'm not sure you could get a tight enough seal on something coated with creosote to actually store water.

But the blocks are banded with iron, pretty sure banded wooden barrels weren't coated with anything and still held water fine?

Maybe they were and I just don't know a whole lot about barrel crafting...

Creosote is soluble in water, so I don't think the water will taste good :P

Edit: Wood creosote*

More likely concern is that it would leave residue buildup in the Steam Boilers.