First - Running water as coolant is never a good idea, it is not just antifreeze but also lubricates the water pump and protects engine from corrosion.
Engine may leak water from the frost plugs - if you're lucky.
Also quite possible that your heater matrix has a leak, wouldn't surprise me at all if it did freeze. The slight burning smell from air vents could well be coolant evaporating..... is the carpet wet?