NADA, the National Automobile Dealers Association offers a bunch of tips on how to avoid getting soaked by a flood damaged vehicle.
It basically boils down to paying for a full, third-party inspection to evaluate the interior and engine compartment, to check for water residue and stains, to look for rusting and fading, and to do a smell-test for mold or musty odour.
If you don't know a mechanic or garage you can trust, pay CarFax to send a mechanic to do a complete inspection on your car for about $99. Details are at http://www.carfax.com.
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