Sounds like you are using a Brinkman-type of water smoker. Most folks around here are using electric, but probably started out with them like I did.
You want to soak your wood chunks, I usually throw two or three chunks in the water pan when I start the whole process.
The first step is making sure your coals are hot and are getting enough air; you should have a raised rack in your firepan and vents around the bottom to control air flow.
After that I would go in this order: put your water pan in place, either empty or partially filled to avoid spills. I would then fill the water pan from the top of the smoker with boiling water from a tea kettle. This will save time on getting the water up to temperature. Next, wrap your wood chunks once around in foil. Leave the ends open and poke numerous holes in the foil with a nail. This allows the wood to smoke without burning up to quickly. Place the wood packet directly on the coals, you may want to wait a few minutes until you smell wood smoke before putting the meat on.
It is hard to get to 250 degrees from a water smoker, but you should be comfortable between 210 and 225. The whole point of the water pan is to regulate the temperature of the unit, using excess energy to boil the water, which in turn makes a nice, moist environment for cooking. If your water pan never boiled, your fire is not hot enough. You probably need better air circulation. Open the vents on the top of the unit to draw air through, and make sure nothing is obstructing the air flowing up from the bottom of the smoker past the firepan. When you open your fire door you do not want to see grey ash coals like you would for grilling, you should see red coals with visible burning. I used to fan the coals through the fire door, wishing that I had a set of bellows. A dry chunk of smoke wood will add a quick burst of heat, but your unit should sustain a red coal fire if the airflow is correct.
Try
http://brinkmansmokermods.com/default.aspx or other sites for advice on how to get your equipment running, then come back here for all of the other knowledge this great community has to offer.