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As you crank the engine, if the water intake is open the water pump is moving water. If the engine does not fire, the water is not "blown" out of the muffler and out the exhaust. it simply fills the exhaust system, and eventually the water level is high enough in the system to run back into the engine through any open exhaust valve. The intake should be shut if your expect to crank more than a a few seconds to start, then quickly opened only once the engine is running.
That's one possibility, anyhow, as is a blown headgasket in which case water can get directly into the cylinder from the water jacket. As indicated earlier in this thread, lack of compression will make starting difficult.
1984 Fast/Nicholson 345 "FastForward"
".. there is much you could do at sea with common sense.. and very little you could do without it.."
Capt G E Ericson (from "The Cruel Sea" by Nicholas Monsarrat)