Is this an I-4 or V6??
Water in the distributor will mess around with how your engine runs, but shoudln't affect your tranny. Id dry out the engine completely, and see what happens. Hit those parts with WD-40 to get all the H20 out.
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Just call me.............Mr Hyde
03 Topaz Blue 540i M-Sport
The TL-S / The 540i