Never in my readings on how to season a smoker have I heard mention of a full water pan being used. I'm not sure what the water would even accomplish since you are just slathering the insides with oil, impregnating it with smoke, and letting it polymerize to an almost teflon like glaze. That being said, I think water would almost be harmful in the seasoning process as the steam could penetrate a possible missed spot in the oil and cause rust. Whats more, you could get the water stuck under the oil when you put your second and other subsequent coats of oil on there, then its just a hole in your smoker waiting to happen. I'd say your friend isn't doing you any favors by suggesting using water to season a smoker.