Where do I look for signs of this failure? Telltail signs?
No tell-tale signs unless you have it up on a lift -- which you should do anyway prior to purchase! Of course if it's *really* leaking badly you'll notice the oil level dropping, but at that point you'd also notice it in other ways, like if there's a pool of oil under the car. Usually the leaks are much more subtle than that. (Case in point, my SLK32 has a leak at a rate of a drop or two per month. I keep an eye on it, but I won't replace it until it gets worse, as I could very well have sold the car by then. All rear main seals leak, the question is whether it leaks enough to qualify as an issue that needs attention. And that part is subjective...)
When you do, look at the front of the trans bell housing and look for oil drips.
For that matter, take a rag and wipe it. Brown/black = oil, red=ATF.
Best place to look or check the roof and hydraulics are still in good working order. Other than testing opening and closing, what's the best way to visually inspect this system for leaks and other issues?
Make sure the headliner is not wet. Take a flashlight and look for water anywhere during your carwash (i.e. be inside the car when you drive through...)
Check any seals for distortion, cracks, tears, etc.
Regarding the hydraulics, listen to the sounds. The pump should sound even and smooth. The motion of the roof should be smooth. If it's jerky or if the pump sounds strained (like "rrrrRRRRRRrrrrRRRRRRrrreeeeee" or something) then you may be in for a problem. (Or the hinges may just need some lithium grease...)
Pop the access cover in the trunk and check the hydraulic fluid level. They're lifetime filled, so if the level is out of range, something's up.
Also, a wet headliner can be due to either water or leaking hydraulic fluid (from the roof locking cylinders.) In my book however, wet headliner = no sale regardless of the cause...
Are you talking about water leaks into the interior or other sorts o leaks?
Water leaks into the interior.
Also, if you have a screwdriver, drop the access cover in the passenger side and open up the AC blower to look at the filter. If it's clogged with debris or wet, be careful! If it's wet, you have clogged drains up front and should be careful you don't have other water damage.
Where are these drains? Easy to inspect?
This is covered elsewhere in the forum (sorry, no link off the top of my head, but search should help), but the basics are:
Three under the hood. One is in the center of the trim beneath the windscreen. The others are at the corners. You will need to remove the trim to clean them, *but* a flashlight and some careful poking and peering should be able to show if there are any serious amounts of debris. If you've looked at the blower and filter and don't see water, then I guess you're OK even if they are clogged (provided it doesn't rain on the drive home.)
Two at the rear of the car, at the front corners of the trunk lid (right behind the B pillar). These clog easily, so take a water bottle and dump some water in. It should exit in one of two places: from an angled outlet to the front of the rear wheel on pre-facelift R170s, or from the fender behind the rear wheel on post-facelift ones. The pre-facelift design is more prone to clogging due to the spout location, and has much worse consequences when it does clog (cabin water ingress). In both cases, clogged drains will cause water buildup under the rear window which can breach the trunk seals. This leads to PSE pump failure, among other things.
Two more drains are by the rear windows. They're pretty easy to spot with the top down: they're obvious holes right at the leading edge of the window. Visual inspection or a *small* amount of water is fine -- they don't get much water in normal use anyways.
Two more at the top corners of the A pillar. Again, these don't get much water with the top up, so a quick test and visual inspection should be fine. I can't remember where these exit, but when you do test with water MAKE SURE that they don't lead to water exiting on the cabin side of the seal. The seal extends into the cabin area, and (particularly on the R171 design, which is similar) water can get into the cabin via this seal and run along the inside where it is unnoticeable... until it damages something, that is. You'll also want to make sure that the leading edge of the seal (where it contacts the windscreen side, not the roof side) fits well. Again, test with a small amount of water with the top up and someone inside the car. Check the A-pillars (pry back the seal slightly with your hand) for signs of water running down the inside. This is a right b**** to deal with if it goes unchecked for months, so you don't want to miss it. (Speaking from experience here.)
Oh yeah, and check the side mirror seal. It's designed such that when closed and when it has water on it it will not let *any* water between the rubber and the glass. (Despite what a salesman may try to convince you, there is no internal drain there. Water that gets in on the exterior side between the rubber and glass will dump directly inside the door. You just won't see it... until after he makes his commission.) If the window alignment is off or the seal is old, it will let water in, which will either end up inside your door (which is basically impossible to notice until it's done damage) or -- if you're lucky -- will trickle out from under the trim piece on the interior side. Of course if it does that, then it'll run down and soak all the door panel material which leads to all sorts of fun problems... So check for this. It's easy to fix -- usually just window alignment does the trick -- and even if the seal has to be replaced it's not *that* expensive, but missing the problem until it's too late can lead to expensive interior repairs (like replacing waterlogged door trim).