I can speak about the Browning M1917, one of which I have. (I'm pretty sure other watercooleds are similar.) No, the inside of the jacket and the outside of the barrel are not plated. The barrel is in direct contact with the water. There are seals made of asbestos string on either end of the barrel (in a groove near the breech end, that bears against the inside of the trunnion, and around the muzzle end, held in place by the packing gland). The gun was supposed to be transported with the water drained out, and the water was carried separately in a large "canteen" designed for the purpose. There are two plugs in the jacket for filling and draining. There's also a steam tube that runs the length of the water jacket, in the inside top, that has a sliding sleeve that covers one of the two exit holes, depending on whether the gun is pointed up or down. The steam tube is connected to a fitting to which the external steam hose is attached. This steam hose is supposed to run to the condensing can, which is partly full of water and converts the steam back into liquid water.
Rust is prevented by keeping the water drained out when the gun is not in use, and the inside of the jacket well oiled. Sometimes a rust-preventing antifreeze was added to the water (when available). The gun gets so hot that any excess water is boiled off when the water is drained.