Corrosion is not the issue here, it is condensation. You have to worry about all your parts sweating and shorting themselves out.
As for the submersed in distilled water; It will work, but not for long. It will start to pick things up. Dirt, small metal filings, sediment, all kinds of crap that would slowly make the water conductive again. I've seen someone submerse their computer in oil, but it was only for looks really. You cannot get a good cooling on that, as you would always need the oil or whatever moving around.