The brown water stopped after a while, but it actually took quite a bit for it to clear. Let the water run and went to snow blow the driveway and do a couple things in the garage and it was still not clear after. But now it's clear.
But yeah that was a bad idea to play with the water heater... glad I got it going anyway. The burner chamber looks pretty terrible though, lot of rust and orange flames. Orange = inefficient combustion. So ya I should start saving up for a tankless since that's my eventual goal. Some of them can also accept a radiator loop for heating, so I would use it to heat the garage once I insulate it. Cheaper than running a gas line and putting a heater in there, and more efficient long term.