The filter element should be included with the whole water separator assembly. Look around online you might find it cheaper then the $137.40 from gmpartsonline, although thats a pretty good price considering your are also getting the water sensor and heater along with the housing. Try checking Rock Auto, amazon, and ebay. Two months ago I was able to purchase a brand new complete water separator including filter in original box from ebay for only $39.95 including shipping (cheaper then just the filter).
My 6.0L PS uses a similar black cap for both fuel filters and the oil filter, I never had to torque any of them just needed to snug up a little as the O-rings do all the sealing. Also I use a light application of grease on the o-rings since the diesel fuel causes them to swell a little which makes for a tight hard to remove fit.