As everyone noted, small amounts of water will turn to steam in the engine, some of it will escape down the exhaust pipe and out. The normal combustion process in a cold engine produces quite a bit of liquid water, you might have noticed liquid leaking out of the tail pipe on normal occasions, and the design has it so that a small amount of water can flow out of the engine out the tail pipe without harm.

A lot of water though, will hydrolock the engine (like if the air intake got into a lot of water, and if the pistons tried to compress the water it will destroy the pistons). But most likely to happen in a fuel injected car is if the fuel line was all water, when the water gets to the injector and is sprayed into the chamber, it won't combust and the engine will putter out and the fuel pump will stop delivering water preventing hydrolock.

Calvin