Question:
Can anyone comment on whether the drinking water in southern Germany is very pure, and are there companies there that deliver purified or distilled water to residential homes?

Answer: distilled water??? H2O Are your sure. Only available for technical purposes. Cannot be found in in the food department. Dangerous to drink as the body will loose important minerals. Even for adults. Thus as long it's not written on the milk-formula that it should be made with distilled water: don't use it

The tap water has drinking quality everywhere. At some place the amount of nitrate is too high for babies, thus you can buy in supermarkets bottled water which is "suitable for baby food" (fьr Sдuglingsnahrung geeignet). Sometimes you can find also some kind of "baby water" - nice marketing gag, expensive for the customers. In tests no better than "normal water" which is "suitable for baby food".

In some places it's however a waste of money to buy bottled water. There the quality of tap water is better than anything you can buy in bottles. As nice the bottles may look and as expensive they will be.

side note: Coca-Cola's Disani disaster in the UK http://news.bbc.co.uk/2/hi/uk_news/3523303.stm (Afterwards Coca-Cola withdraw the already planned market introduction in Germany.)