If it's bad enough, you will start seeing milky oil. Sometimes it can be a little bit more "sneaky", and just get enough to start pitting exhaust valves, seats and cylinder walls. Or you can end up with the worst possible scenario and have cold lake water getting sucked back onto a hot exhaust valve and shatter the valve head. That is one reason they recommend inconel valves in a performance marine application.

Sometimes you can remove a manifold or riser and see water accumulating there. I have heard people say that they can look up an exhaust pipe and actually see drops of water migrating back up the pipes!