Using enameled copper wire as a capacitor for measuring water level in a tank?
I'm trying to make a capacitive water level sensor using two enameled copper wires used in transformers. ... The distance between them is 0.5 cm, they are submerged in a water tank made out of acrylic. As the fluid level arises capacitance should change, the "sensor" is connected to a IC555 timer which is used to generate a square wave with frequency inversely proportional to the capacitance.


Unfortunately the capacitance is miniscule and totally inappropriate for use with a 555 timer based measurement. You are dealing with pF.  

There are potentially a range of relatively easy approaches you might take:


Use a sonar acoustic sensor to measure the return from the top of the fluid.
Use a TDR (Time-Domain Reflectometry) measurement of the parallel wires and measure the reflection from the air/fluid transition. 
Back the parallel wires with a magnetic strip (fridge edge magnet) and measure the time for a coupled pulse to return from the air/fluid transition (very similar to TDR but much slower wave front speed)
Use stainless steel piano wire and an acoustic signal pulse to measure the time to air/fluid transition (reflection). 
Measure the pressure at the bottom of the tank (there are some very sensitive pressure sensors). 
Bounce a Laser off the air/fluid interface and use a cheap camera chip to measure the angle.


This might be a good start to you reading on sensors for measuring fluid levels.