If your charcoal ashed over in the chimney I would be inclined against the idea of it being bad. If it was bad it should have gone out as soon as the starter cubes went out. (BTW, newspaper works just fine if you do it right. Roll a single sheet of newspaper into a squashed tube. I do it like I was rolling a bandanna. Then fit the tube of paper around the inner perimeter of the bottom of the chimney. It doesn't have to be perfect. Just be sure there's a hole in the center. Repeat with another sheet of newspaper. What you want is newspaper around the perimeter with a hole in the center of the chimney. This will draw properly and have the charcoal going in no time. I had nothing but trouble with my chimney starter until I learned this technique.)
You were obviously getting more than sufficient air flow through the WSM. Most of the time I find I'm closing the bottom vents almost all the way to keep it from getting too hot. If your vents are working, you're getting enough air.
That leaves water spilling from the pan as the culprit. I've heard of this potential problem when foiling the pan but have never witnessed it, probably because I don't place that much emphasis on keeping everything spotless. If you're going to put water in the pan, don't foil it. As long as you don't let it boil dry there's no need for the foil anyway. If you're going to run it dry, foil is a good idea. You can end up with a real baked on mess otherwise.
Give it another try without the foil in the pan. I'll bet it works okay.