Distilled water is recommended for CPAP therapy, as using tap water with your System One Water Chamber could lead to hard mineral deposits that make it harder for your CPAP equipment to work properly. When using humidification, whatever is in the water in your 60 series heated humidifier unit is going to end up in your lungs, so be sure to use the cleanest water possible.
If you're struggling with condensation buildup in your CPAP hose, consider using heated tubing.