Burning is from unnecessary feeding, stunting is from being in ridiculously small cups with no room for root development.
The commercial soil you are using will have enough nutrition for seedlings for 3-4 weeks without the need to give anything else.
Water quality is not the problem, any water fit for human consumption is fine for plants, chlorine and all.
Don't worry about the humidity, it really isn't that vital and low is better than too high.
Black plastic pots about 4 inches across and 5 inches deep are ideal for starting seedlings and will provide enough room for 3 weeks of root growth without stunting the plants, by which time they should be ready for transplanting.
The best thing about decent black plastic pots is that they can be washed between cycles and with a bit of care will last many years, reducing garbage to landfill and making environmental sense.
A plants roots will be roughly twice as long as the plant is tall, meaning that the roots of your seedlings in those small cups are running out of room very quickly, leading to the stunting problems you are experiencing.
For pictures of a 3 week old seedlings' root system, which may help you understand this concept better, go to my diary "cannabis conundrums" and in week 7 you will find the pictures, along with some other interesting pictures of weird and wonderful things cannabis plants are capable of!
At this stage, I would be transplanting your seedlings into much larger pots and not feeding them anything for at least 3 weeks after this, and when you do start feeding, start them on half strength nutrients, as this is usually plenty strong enough.
Remember too, it is very easy to correct a slight under feeding, but very hard to rescue an over fed and burnt/damaged plant!
Hope this helps, Organoman.