With power vent water heaters you rarely smell exhaust inside the house. The induced draft motor should start some time before the burner kicks in and stop a while after the burner turns off. Check all the vent pipe connections – they must be air tight, and check the pipe for any obstructions (rodents, birds, etc).
If you smell gas after the burner kicks in, there might be a loose gas pipe at the regulator – between the regulator and the burner. Put some soapy water mixture on all gas pipe joints and look for bubbling.