Pete,
I am going to let Doug completely clarify the water advice, but I spell it sealed, most of the time <img src="images/graemlins/crazy.gif" alt="" />. I got a D in spelling though.
My intrepretation of the water advice is this. Fill the Nalgene Lexan bottle with prepurified water, leaving the lid slightly loose, place it in a large pot of water and boil it for a certain amount of time, remove the Nalgene bottle and tighten the lid.
This is how my Mother canned foods. My guess is the Lexan bottle is required to take the resultant vacuum created by sealing (or seeling <img src="images/graemlins/wink.gif" alt="" />) the hot bottle of water.