Being a fish keep for to many decades, I have used silicone for all sorts of applications... damp or bone dry will both work. With both you will have to look at it after it cures to make sure that no spots were missed and repeat as necessary You will get better, faster results is it is dry. But because the dry fibers will fall out exposing the bare spots. Whereas damp filber will stick to one another until dry.

To dry the substrate quickly... if you dont want to want until it dries "naturally", spread tin foil over a cookie sheet, spread the substrate over the tin foil and place in a 180-250 degree oven for apprximately 1 hour or so. Basically the lowest setting for you oven. The low heat will not burn the coco fiber, simply dry it out. This also great method to make sure that selected, found or questionable wood is safe for terrarium use.