Well, my own set of survival priorities is:
The nice thing about mindful preparedness is that you probably shouldn't have to choose one or two out of your list of necessities. The point of prepping is to cover all or most of your bases before the actual need arises.
That said, I'm going to first address your question about water.
In the Midwest, water should not really be a problem.
a. If you have the space, it is highly advisable that you have some water stored. 30- or 55-gallon water barrels are pretty readily available (buy new to be sure of what you have). If you need to, buy a bunch of 39-cent one-gallon jugs and store them in a dark place after you've filled them, not directly on a concrete or dirt floor. A bare minimum of one gallon per person per day should be planned.
Boiling any questionable water before drinking or using in foods (and even washing or brushing teeth) is highly recommended.
Using chlorine bleach to purify and preserve your water is going to lose effectiveness after about 6 months. Nonetheless, don't let that deter you from storing the water anyway. Here's the EPA's guidelines for emergency disinfection of water: http://www.epa.gov/OGWDW/faq/emerg.html
b. Again note, even stored, bottled bleach loses it effectiveness in a matter of months. So bleach is not a great long-term storage solution for preparedness purposes.
Note that there IS a proprietary water preserver concentrate available on the market that keeps stored water good for up to five years.
c. Last point on water--water purification tablets and good water filters should definitely be on hand. You never really know where your water will be coming from in an emergency or indeed where you will be going in an emergency.
Now on the expired food.
I'm not sure what you mean by "DR" food. Whatever type of food you have, unless its been exposed to moisture, humidity, and/or heat over a period of time, it is probably going to be just fine beyond any "best by" date. Expiration dates are a bit trickier, but on canned or storage foods, you don't usually have expiration dates.
Canned foods are going to get you your longest shelf life. Freeze dried and dehydrated foods in cans are the best storage foods in terms of longest shelf life. Soft containers are not impermeable and are pretty susceptible to the environment over time, so depending on what exactly you have, those are factors to consider.
Myself, if you are talking about the food being "just in case," and you have the space for it, I would keep it on hand.
Now here is where a lot of folks are thinking, "store what you eat, eat what you store" ... you know, rotate your food so it never goes bad. That's great advice if you can follow it. But for many of us, it just is too much of a pain in the basket to do that religiously. Hence, the value in honest-to-goodness long-term storage foods. Buy good storage food that you know you will eat if and when the time comes, and that you will actually enjoy. Make sure it is easy to prepare. Make that investment once and you acquire permanent, low-maintenance peace of mind. (No need to toss out, replace, or wonder about "expired" foods anymore.)