If I were you, I would ditch the water and run strait M1. Get a tune for it. My IAT's were not reading the meth on the stock motor, since I put it right before the TB, but I tuned it on the dyno with no fail safe for the meth no kicking in(trusted my meth light). The motor wasn't going to pull timing if the meth didn't kick in since it was after the MAF. At 10psi with stock exhaust, stock cam, etc, I went from 130mph to 136mph with strait M1 on my LS3. No reason it would be different on a 5.0.
A lot of different ways to set it up. Speed density tune is the best way to go with boost and meth and that is what I am doing now.