Again, not an expert nor have I done this, but perhaps it can tolerate little water, but the water undoes the imine formation, it's an equilibrium reaction. So to push the reaction towards the right, aka toward forming an imine versus not forming it, just make it anhydrous. Less variables, less worries, more success.
Methanol is the preferred alcohol for this reaction, it boils low and is just the right temp where the boiling will help control the temp to an extent, and won't have degradation of product due to overheated solvent. Just what I've read though.