I would guess that your old timer was referring to Marvel Mystery Oil. It was developed in 1923 to remove the carbon deposits from the Marvel carburetor and still does an excellent job of removing carbon in today’s high performance engines. There are a few ways that you can use Marvel Mystery Oil to help solve your carbon problem. The most recommended way is to add 4-ounces of Marvel Mystery Oil to 10 gallons of gasoline. Do this at every fill-up. If you do not drive the car every day, remove the spark plugs, pour 2 tablespoons of Marvel Mystery Oil down each cylinder, replace the spark plug and leave set for about 48 hours. Thirdly, you can slowly pour the Marvel Mystery Oil down the carburetor being careful not to stall the engine. The long tern solution is to use the Marvel Mystery Oil in your gas with every fill-up.
There used to be products both liquid and aerosol that did indeeed contain water. This emulsified water was either poured into the gas (liquid) or sprayed down the carburetor (aerosol). The theory was that when these products were burned or combusted, the water turned into steam and in effect you were steam cleaning your engine. I don’t think there are any of these products still on the market.