Unless you could mix exactly enough water with the ethanol to separate it without flooding it, there will be too much water for the engine to run smoothly. You could run any gas engine on ethanol, really. You can even run diesel engines on it, but they have to be tuned accordingly (really turn down the pump and much smaller injectors.)
The problem with diesel is the evap point for ethanol... diesel fuel injection pumps can hit 6,000 PSI, and ethanol would evaporate long before that, so you'd need to introduce a fuel system to the intake that was metered by engine speed/load to prevent "runaway".
In a gas engine, you just put in different jets and tune the carb/ignition accordingly until it runs right, but you'll still have to separate the water, I think.
Dry gas is methanol (ISO-HEET blue can) and/or ethanol (other kinds), so that won't work. The sulfur is an easy method, though, if you burn solid fuel for anything. The downside is the creation of SO2 and SO3. If you could recombine it into SO4, then add H2, you could make/sell Sulfuric acid... LOL.
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