Both steel and aluminum are subject to internal oxidation, a process that contaminates the air in the tank and weakens the metal. Aluminum oxidation is only a minor problem, because once a thin layer of oxide forms, it protects the underlying metal from further oxidation. Although the white powdery stuff will not be good for the insides of your regulator, the tank itself is rarely harmed and can usually be cleaned. Lying on its side will be worse than standing on end, because the walls of the tank are thinner than the bottom. A tank charged with nitrox will also be at greater risk because of the greater concentration of oxygen in the mixture.
Water usually gets inside a tank during the fill process.
The short blast of air will drive out any water. Dry the whip. A good fill operator will let out a short blast of air from both the tank and the whip before putting the two together. Avoid the fill tank of doom. The ubiquitous tub of water at the fill station may may not be as good an idea as it sounds.