Changing 240 tankless water heater to 120v tank heater
As far as wire size, you're always allowed to use bigger wire than is required.  Stay under 50A and that #8 will be fine.  

As far as breakering that 18A heater at 30A, let's look at that.  You must derate a heater by 125% of its nameplate rating. 18A x 125% = 22.5A.  So you need at least a 22.5A breaker.  You can round up.  30A looks okay to me, unless your AHJ insists on you using 25A.

Powering a 120V load off half a 30A breaker is fine.  In fact I recommend using a 2-pole breaker for a 1-pole/30A load, because 2-pole 30A breakers are commonly used, and 1-pole 30A breakers are unlikely to have another use.