I have some carbon spark plug wire, the resistance of it is pretty high, but I can surely try it. I suspect it will work just fine.
Can we make a coil of carbon and still use it as a transformer effect? If not then there is more to it than just electrical current flow around a magnetic core material.
What I think might be the most useful aspect of this is the electrodes we use in the water are critical. I think with the proper setup, achieving 100kV as Alex suggested would be easy. I mean, coating the electrodes with a certain type of oil may make all the difference.
The other aspect to this fits nicely with what Stan mentioned: You could use any type of water, tap water, distilled water, rusty water, swamp water, whatever. The water isn't critical, the electrodes are. If we crack this thing, that will be pretty important for places that have cold winters--we could add anti-freeze without messing anything up.