The Sniff Test
The quickest way to sniff out whether or not a car has flood damage is to literally sniff it. It's very difficult to completely rid a flood-damaged car of its moldy aroma, and mildew formation is a sure sign that the car was exposed to significant amounts of water. This unpleasant smell is a helpful clue for prospective buyers.
If you smell the mold right away, you're probably looking at a flood-damaged car. If you aren't quite sure, however, close the windows and doors, sit inside, and give it a good long sniff.
In addition, you may appreciate the pleasant scent of an air freshener, but be warned that strong air fresheners may be a sign that the dealer is covering up a less agreeable odor.