Yes, water is created in normal ICE usage but H2 usage creates more because H2 only creates water after combustion whereas petrol creates other products too, like NOX as you suggested.
The aluminium doesn't react with the salt as the salt is just a catalyst. The Al reacts with all the spare O created by splitting the H2 from the O in water. After the reaction is complete, the same amount of catalyst remains. The aluminium will have bonded with all the oxygen it needed in the water. Essentially it is returning back to aluminium oxide (Al2O3) which is the final step to producing aluminium in the electrolytic process.
Al2O3 is made into aluminium using lots of electricity, which can be generated using renewable means such as solar cells but only at a larger more economical scale. As my aluminium source (it's the aluminium lining in juice cartons) would only end up in a landfill site then the aluminium is giving more value for money before being lost forever. My Green awareness and knowledge of Peak Oil mean that cars play a very small part in my life, which is spent in the middle of the countryside.
Here are some links to spur you on:
A video of an ICE running on pure H2 -
http://www.spiritofmaat.com/archive/...erenginehq.ram
A company working on H2 combustion that admits to embrittlement problems -
http://www.switch2hydrogen.com/h2products.htm
Another company using H2 (and a variety of other flex fuels) -
http://www.knowledgepublications.com/