There are plenty of threads here about oil. Get one that is JASO MA rated (which is what our bikes call for). I used to use Rotella T, and now use Rotella T6 synthetic. Both are diesel truck oils that are JASO MA rated. Much cheaper than motorcycle specific oils.
To get the water out of your engine, shut off your petcock, drain the float bowls, remove the spark plugs and ground the wires, open the throttle wide open, and gently turn the engine over a few times. Then kick it over a few more times.
Change the oil and filter.
Drain the tank and fill with some gas line anti-freeze (or methyl hydrate) and slosh that around and drain. Repeat until the gas line antifreeze (or methyl hydrate) drains clear. Then fill the tank with gasoline and prime the carbs. Install the sparkplugs and try starting it. Once it is running, take it for a 15 - 20 minute ride and work the bike to get it good and hot so any remaining water is evaporated.