You're opening many cans-o-worms here, and I could write a dissertation on lots of them, but I'm not as good of a novelist as you are. Just a few points:
The USGS Water Supply Papers are available here: Search Results - USGS Publications Warehouse
There are hundreds, if not thousands of them on every water related topic you could conceive of. They are probably the best information available, but may not be written for the average-Joe reader.
Water quality in Gillette has improved significantly over the years. I believe that they used to use a lot of surface water in their supply, but now have a well field south of town completed into the Fort Union formation (coal). It's very good water. They are in the final stages of developing a new well field and pipeline system near Devils Tower. It's out of the Madison formation. I don't know the water quality, but the Madison is pretty deep, and I've seen some Madison water that hasn't been all that impressive. I think the intention is to mix the poorer Madison and better Fort Union water to achieve a desired quality standard.
I don't think in terms of geologic periods like Ray does, and can't make water assessments based on that, but typically, around here, the deeper the formation, the poorer the quality. I worked a 10,000 ft injection well near Big Piney that had Total Dissolved Solids (TDS) of around 100,000 milligrams per liter (mgl). Fresh water may have around 500-2000 mgl. Some of the coalbed methane wells south of Gillette were producing water from about 1000 ft with TDS of 1000 mgl (incredibly good water). There were areas that the water had lots of iron, but it was very sporadic.
Shallow groundwater, being from unconfined aquifers are more susceptible to degradation. Things spilled on the surface can leach into the water, while deeper, confined aquifers are usually protected from leaching by a clay or shale layer. However, some of the best groundwater I've ever encountered is from the Sandhills region of northern Nebraska, which are mostly unconfined aquifers.
Fracking is a topic that is a little too politically contentious to discuss in depth. However, I will say that virtually everything you see in the media about the topic is completely wrong. The media has done a huge disservice to the public hyping topics they have no understanding of. "If it bleeds, it leads", and all they're concerned with is selling "news". I researched water quality impacts associated with fracking a couple of months ago, and couldn't find an impact that wasn't the result of poor well completion. Also, at least in the western U.S., most fracked oil and gas wells are MUCH deeper than any aquifer used for domestic water supplies. So there are numerous confining layers between the production zone and the aquifer. Therefore, I'm confident in saying that with proper oversight and responsible operators, fracking can be done safely.
H2S is a serious issue. In low concentrations it's harmless, but the odor can be annoying. However, you get desensitized to it and won't smell it after a while. It's flammable, and in high concentrations it's lethal. We get a little bit around here, but usually only late in the summer when the aquifer gets drawn down, and only notice it when the water warms up (Boyles Law). That's why Yellowstone stinks: hot water.