Overly damp wood, whether it's a campfire or a smoker box, will produce a moderately acrid smoke. However, with very dry hardwoods a quick soak (two hours or less) and then an hour of drying can be beneficial. With wood chips, it helps them slow the combustion process and produce a longer smoke. Even then, when I used an old Brinkmann water smoker, I'd pat dry the chips before loading the smoker box.
Fresh wood does not need soaking ... not worth the downside. But if you're stuck with old, bone-dry wood, there is risk/reward option that may give you decent results ... the extra white smoke is less bitter than full-blown combustion of your chunks.
With regard to damage to the element, so long as they are surface-dry they should be okay but good wood is the infinitely superior option, IMO.