If there's water on the air side of your expansion tank, it means the
bladder is ruptured and you need to replace that expansion tank.
I believe that using it the way it is could expose you to drinking some
dirty water, but that happens every time you visit a country like Haiti
or India. I expect that in most cases you wouldn't get sick because
you're not drinking any kind of bacteria you haven't been exposed to a
hundred thousand times, but it's still possible that you could get sick.
The reason why sailors were able to eat rotten food on long voyages to
places like America and Australia a few hundred years ago is because the
acids in your stomach pretty well kill all the bacteria that ends up in
your stomach. Basically, your stomach eats the bacteria like it was
food (no different than when you eat cheeze or yogurt, both of which are
full of bacteria). There are certain bacteria, like e-coli, that can
survive the acid in your stomach and make you very very sick with a
disease called "cholera", and that's a potentially life threatening
Still, the bottom line is that if you've been drinking tap water in your
house with that ruptured expansion tank bladder, and haven't gotten sick
yet, then you're probably safe to continue what you're doing. But you
still should have that expansion tank replaced anyway.