Much of nature is a zero sum game. Yes you can break down water to hydrogen and use it as a fuel. However the energy from using the hydrogen only equals the energy to produce it. Moreover, this is not like playing poker with the neighbors where the wins equal the loses, but like at a casino with a substantial house take. Neither breaking down the water, or burning the hydrogen is 100% efficient. In the end, you lose.
I wouldn't worry about the water vapor produced. You are already running your car at 10%-15% hydrogen. For every pound of normal or any of the isooctanes you burn, it produces 1.42 pounds of water. This is part of the reason we change oil and exhaust systems regularly.