It removes far more water than the cotton filter if you purge it often enough. But even when combined with the cotton filter it will not remove all of the water. If you purge, both the high and low systems for a couple of seconds, every five minutes and replace the cotton filter every twenty, set the old one aside to dry and use it later, most of the water will be removed from your system.
Many of us use a secondary filter to catch the rest of the moisture not removed by the cyclone and cotton filters and purging. It depends on the humidity level you are in how much more of a filter you need if any.
Add a better filter if needed to be sure more moisture and any oil smell is removed from the system. Many of us use this Tuxing three media filter although, if you feel the need, you can change media types at any time.
https://www.aliexpress.com/item/32891898253.html A smaller one will probly do for many.
https://www.aliexpress.com/item/4000960926898.html?spm=a2g0s.9042311.0.0.2a034c4dL0nrJU.