Does this hotel carry bottles of distilled water for CPAP users? If not, is there somewhere close by that sells it (drugstore or grocery store)?

They do not. We had to buy our own. There is a Safeway a few blocks away. I suggest walking there, parking is a pain and i got ripped off paying for it.

I don't know if the hotel carries that, but I remember trying to look for a drugstore whej i stayed here and the nearest one was over a mile away (not within walking distance).

You have to buy your own.