Kind of sound like an air leak somewhere to me.
I don't see any mention of trying to run it without the draft controller either. That is possible to do isn't it?
If you can get it running nice without the controller, than by process of elimination....
If it still runs too hot, might be a leak around the intake like is mentioned above.
IMO, you shouldn't "need" water in the pan to keep the temps down. It's about too much O2 getting to the coals.
Modded Brinkmann Gourmet. Basic UDS. Rescued 22.5" OTS. SJS Mini-WSM. Stubbs. B&B Oak Lump.
Cannondale 2009 F8 (for burning off all the great BBQ)