The smp server I play on has a general "don't cheat, but feel free to exploit" rule. This means no using /give to spawn water blocks for placing in the nether. However, our admin recently installed the monsterhunt mod and made ice blocks one of the prizes for first place. So, do ice blocks placed and broken in the nether produce a water source, or do they just evaporate like using a bucket of water?
It used to be possible to get water into the Nether with this, but as of Minecraft 1.3.1, ice blocks in the Nether simply disappear when they're broken (or when they melt from a light source).
Ice blocks can now be legitimately obtained in survival mode by harvesting them with a Silk Touch enchanted pickaxe. However, the ability for ice to create water in the Nether was removed.
So no, you cannot get water into the Nether using ice blocks.
No, they don't. When you place ice in the Nether, it will just evaporate. But if you place it in the Overworld, it stays there until a light source melts it. the sun does not work.