Yeah, thats right oldboot. But I dont think enough water can get in to cause a problem (believe me Ive tried). My sending unit is tucked so high to the chassi I doubt any water can get to it unless Im stopped and submerged well over my bonnet. But 4x4's are different I guess. The manufacturers have already addressed the water, sludge and particles anyway with their inline diesel filters. Makes sence that if air is replacing the fule thats leaving the tank then condensation creates water inside your tank anyway.
Diffs are a 1 way street. When stuff gets in there its not coming out. By all means it wouldnt hurt to put it higher or a filter on it. I just havent found a need to on my 4x4, nor think its as important as diffs. Just MO