it looks like water... in a clear container [long and skinny like a test tube] you will see if you have water in the fuel if you let it separate out. . at work when i check for water in the fuel tanks on the loco's, it is rare to find it [i just crack the drain plugs and look/feel/smell at what is coming out and 99% of the time it is #2]
if you have some old drain pan you are draining the filter housing into, you won't see water in the fuel unless you have lots of water in the system... the fuel sits on top of the water, so you need to see it from the side. .
if you really want to see how it looks like, get a test tube [or something similar] and pour in some of fuel. . then start adding water with an eye dropper and let it settle out. you will see that it collects at the bottom [unless you have some fuel additive that will let the water bond with the fuel oil - alcohol, solvent... ]