Personally, I don't understand the 'distilled' thought either. I can understand wanting 'clean' water so that you don't get stuff growing inside your system, But here is my take on mineral deposits....
If there is stuff dissolved in your water when you put it in your wateerblock/chiller system, then it is going to stay in solution, unless you are succeeding in chilling that water way down (for the most part this is not true, since you are chilling off ambient temperatures) Your system should always be running at higher temperatures than ambient in the real world, and warmer liquids hold thier disolved solids better than cold ones so you should never get a deposit.
A problem could arise if you had some water loss through evaporation such that you were concentrating your solution (like salt water leaving a salt residue when it evaperates) But for the most part you aren't adding alot of water to your system.
For the thoughts on corrosion, Water is called the universal solvent for a reason, it disolves things. The more pure water is, the more corrosive it is. (unless your impurities are acids or something) Probably the reason people aren't suffering corrosion problems using distilled water is that they are adding things to it like water-wetter, or anti-freeze.
I feel safe using tap water in my chillers, however I wouldn't if your tap water is some really high mineral content ground-water. If you do use distilled water adding something to it will reduce your corrosion.