As for the water bottle...This is what I use for running outside! It rocks!
http://www.amphipod.com/320/320.html
....Advice??
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running in a 5k is highly enjoyable, and the time will go by so fast. Running outside really is not that much different. As othrs suggested, try setting the treadmill incline to 1%, and if you can find the opportunity, try running outside one or two times...You can go uber early in the morning, so others wont be around to see you, if that is your concern....I think once you get to the race, and experience it, you will find that your self doubts will begin to melt away, revealing a more confident you!! its an expeirence that could make all the difference for you!! Godd luck with whatever you decide!! 
Even when I was at my most out of shape and could barely run four blocks without stopping, the other runners still waved to me, just like I was one of them. No one ever waves to me when I'm running on the TM.


