I'd like to possibly create a tuning mod for the Salt Water Deficiency moodlet mermaids get when they don't have the Permanent Mermaid lifetime reward. The thing is I'm not sure where in the game files to look for it. I know I can open one of the package files there with S3PE in there but which one is it?

The package file you're looking for is GameplayData, located in install location The Sims 3 > Game > Bin > Gameplay folder.
It can help to copy and paste this package somewhere so that you don't accidentally overwrite the original while browsing.

The resource you'll need to modify will depend on what exactly you want to tune about the moodlet -
the time until it's applied is in the OccultMermaid XML, everything else (strength, duration, etc) is in the master Traits XML.

Thank you!