Here is my understanding of the process:
1 No H20 vapour, just elemental halogen vapour which reacts with the silver to make halides.
2 Silver halides exposed to light are reduced to tiny crystals of metallic silver.
3 When exposed to mercury vapour, blobs of mercury grow at the sites of the tiny silver crystals. The mercury does not bind to areas of the plate still coated with unreduced halide.
4 The thiosulfate wash removes the halide leaving a matt white image made of tiny drops of mercury on a silver mirror. Yes not really a true positive – it has to catch the light correctly. No mercury halides involved.