synthetic motor oil would be a better option because it causes less corrosion. you can put the psu in there if you want but you need to make sure that the fans are either removed or disconnected as the extra resistance of the oil will make them run slower and they'll draw more current.
other than that you just need to make sure everything is suitibly mounted and the tank is sealed... it might be worth putting a drain point in the bottom so you can empty it if you want to.
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