The pilot reported that he was interested in purchasing the airplane and the accident flight was a demonstration flight. The owner of the airplane provided a flight instructor as the pilot had not flown the make and model airplane in many years. Prior to the flight, 10 gallons of fuel were added to each wing fuel tank, to bring the total useable fuel to 38 gallons. The pilot further stated that he and the flight instructor then performed a thorough preflight inspection, which included sumping the fuel tanks. The pilot planned to perform touch-and-go landings and the first one was uneventful. While on a downwind leg to the runway for a second landing, the pilot verified that the electric fuel pump was on and switched the fuel selector from the right fuel tank to the left fuel tank. The engine subsequently lost all power and the propeller continued to windmill. The pilot attempted to glide to the airport while the flight instructor attempted to restart the engine, which included switching back to the right fuel tank. The engine did not regain power and the pilot subsequently performed a forced landing in a field. During the forced landing, the airplane struck a ditch, which resulted in substantial damage to the fuselage. During a post-accident examination, about 3 quarts of water were drained from the left fuel tank, about 1 pint of water was drained from the fuel system and no water was found in the right fuel tank. The airplane had not flown for about 11 months prior to the accident flight. During that time, it sat outside for several months. The left-wing fuel cap appeared to have a good seal and the investigation could not determine how water entered the left fuel tank.