Firstly! your compost? you don't mention what type it is but I think choose which one you use, it is not free draining enough!
I would add anything from 25%-50% silver sand to your seed/cutting mix and this should improve matters.
Regarding watering I would not use 'butt' water if possible, but if this is all you have then needs must!
I use water from my butt for for all of my seedlings but it comes from a tap out of the butt and this leaves the silt undisturbed in the bottom of the butt and any algae that may develop on the surface of the water.
But I think drainage is your main problem and perhaps you are using too much water on your seeds.
I find that I only need to water prior to sowing and most things germinate before I need to water the trays again.
OK there are sometimes exceptions so I keep a pump/hand spray handy and give them a light spray if I deem it necessary!
This link might help;
http://www.thegardenersalmanac.co.uk/Data/Seed%20sowing/Seed%20Sowing.htm