electrondady
This is going to sound too obvious but if you decide against the water heater, you can use a 55 gallon steel drum or drums. I made a woodstove out of a 55 gallon drum many years back. I had the drum on its side and a door on the end like yours. It had a baffle.
One setup a lot of people have built is two horizontal steel drums, one above the other, connected by a piece of stovepipe. You can build a chamber into the upper drum to use as an oven.
If you get a closed drum, there will be two bungs on the top. Cut your door in the bottom of the drum. Then when you lay the drum horizontal, the bungs will be at the back and you can use one of them as an air inlet. The bungs have pipe threads, so you can screw a piece of pipe in, that way sparks won't fall out of the bung hole.
Reminds me of a ditty:
The bear went over the mountain
The bear went over the mountain
The bear went over the mountain
To see what he could see
Stuck his head in a char hole
Took a bite of the charcoal
Sparks flew out of his bung-hole
And blew his tail away
And blew his tail away
And blew his tail away
Sparks flew out of his bung-hole
And blew his tail away