While a Stirling engine (yes, I was mistyping it earlier, following the topic title; I thought it looked wrong but failed to check) is generally considered an "external combustion engine", that's somewhat misleading, in that it doesn't depend on combustion at all. More accurately, it's a heat engine.
It's not a steam engine. The working fluid is generally a gas, although I'm sure you could have a mixed phase system. It's generally recirculated, so generally, you don't get any distillation going on as part of the engine itself.
That doesn't mean Dean's thing doesn't do it differently -- but then it wouldn't really be following the Stirling Cycle exactly.
Still, I suspect the distillation (if any) is not directly a result of the engine's operation, but rather the engine's cooling. A Stirling Engine is dependent on the temperature difference, so cooling the cool end by boiling water, while heating the hot end by burning fuel fits the picture pretty well.
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Bob Kerns:
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Obviously, we can't have infinite voltage, or the universe would tear itself to shreds, and we wouldn't be discussing Segways.
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