Not sure how they poured ATF into any motors in the 40's... automatic transmissions were simply not used in the Military. Not till the 50's with the M135/M211 did they try them.. and quickly got rid of them for manuals again when the M35's entered service.
I would completely agree that water was used.
Anything with Teflon in it is rubbish. In order for teflon to bond to metal and reduce friction, it has to be heated to over 700F for a long period of time (ie baked on). Plus Slick 50 got the pants sued off them for their claims of improving anything.
Around the late 80's early 90's motor oils really improved. The additive packages really do well all by themselves and adding anything to a modern engine is really a waste of money.
If you look at what MMO, its a mix of 75% mineral oil, the rest solvents. So you can see why it unsticks things... its 25% stoddard solvent.