Joe,
To answer your question on whether or not you need to seal the end of the fly line to keep water from wicking in when you use the Castwell Knot, I do not think it would be necessary because the Castwell Knot is a very tight knot and I feel the knot seals off the end of the fly line. I make and use my own furled leaders and I use the Castwell Knot and would highly recommend it to anyone who would be willing to try it. I do not coat the knot and it goes through the guides with little problems. You will feel the "bumps" as it goes through the guides and there would not be anything wrong with coating the knot to make it go through the guides easier if one wanted to. Some claim they do not want to use the Castwell Knot because you need to cut some off the end of your fly line each time you change the leader. I can understand that if you are using a mono leader because you will need to change the mono leader more often than a furled leader. A furled leader will carry you through several seasons of fishing. If you do need to cut it off and change it, you will only be removing about 1/2" off the end of the fly line and tying the Castwell Knot only takes up about 3/4" of fly line to tie it. Before anyone "knocks" the Castwell Knot, they need to first try it and if then they do not like it, they can post why. It is a very easy knot to tie correctly and it is a very easy knot to tie incorrectly, so, you need to be careful when tying it. Once you look at it and practice tying it, it is a very easy knot to tie and use from that point on.
The above was going to be my 2 cents opinion, but, I had that 2 cents invested in the stock market and lost it!!!
Warren
Fly fishing and fly tying are two things that I do, and when I am doing them, they are the only 2 things I think about. They clear my mind.