If you are making bubble hash it won't matter if its wet, seeing as how its going into ice water in your bucket anyways. Some will freeze it before doing the process just to ensure the trichs fall off easier.
As for hash oil made from butane, it needs to be dry. When the butane is pumped through it freezes all the molecules. The more water in your nug the more water will be mixed into your oils that come out. As you probly know oil and water don't mix well, in fact they try to seporate from each other. So dry as a bone if your doing oil.