Rc Fuel Faq
Separating contaminating water from glow fuel
Water and methanol are completely miscible, meaning that one dissolves the other in any proportion. Freezing the mixture, letting it settle, etc., have no effectiveness at all. The oil and nitro may separate during such efforts, but the water and methanol stay together. There is no way to remove the water from contaminated fuel since distillation would destroy the nitromethane, and the presence of oil in the mix would make it a difficult, greasy process. With oil and nitro, the molecular sieve would be similarly ineffective.
If your fuel gets contaminated with water, the most cost- and time-effective approach is to throw it away and buy some more.
If your 55 gal drum of pure methanol gets contaminated, maybe distillation offers hope in restoration. No moonshiner that I know would allow you to use his still, though, since methanol is very poisonous, and his customer base will be reduced if his product (ethanol) is contaminated with methanol.
BTW--since gasoline and water do not have a significant affinity for each other, settling and freezing methods do work.