If the threads inside the hole of the water heater are that bad, a 3/4" pipe tap could be used to clean the hard stuff from the threads. Just be very careful to not cut metal, but just screw it in far enough to make the threads clean. Also, make sure a little lubricant is used so the tap doesn't get seized.
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Bob & Becky
2012 3402 Montana
2012 Chevy 2500HD D/A CC
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