This was the first flight of the day, and the airplane was last refueled at Minute Man Airport in November. According to aircraft records, the airplane was inactive for two months. There were no witnesses to the preflight; however, the aircraft was viewed by two other pilots to depart from runway 3. At about 100 feet above the ground, the engine sounds were intermittent. The witnesses reported that during the climb, black smoke was coming from the aircraft exhaust. A second witness, who saw the crash, stated that the pilot tried to make a left turn, but the airplane fell to the ground in a near vertical position. Inspection of the fuel system revealed about one quarter of the fuel contents of the fuel control valve was water. Both fuel caps were secured to their respective tanks, and when sprayed with water, no leakage past the caps into the tanks was noted. Examination of the engine did not disclose evidence of mechanical malfunction.