Page 88 in the August 2007 Motor Boating has a very informative article:
Here are some exerpts:
Gasoline repels water and forces it to the bottom of the fuel tanks, but alcohol loves it, actually seeking out accumulated water. E10 can absorb about a half-gallon of water for every 100 gallons of fuel, holding it in suspension until it runs harmlessly through the engine.
However, because water also bonds to itself, anything over that half-percent threshold forces both the alcohol and water to the bottom of the tank in a process known as "phase seperation" Adding E10 (actually, the proper designation is E-10)fuel to a tank with accumulated water can as much as double the level of unburnable sludge in the botom of the tank, raising it above the pickup tube. This can shut down and even destroy an engine.................................................................................................With E-10 it's best to keep your fuel tanks topped up, to avoid consendation on the inside walls of the tank. Ethanol will actually pull water out of the air. It evaporates faster than gasoline so it has a shorter shelf life.
And now the bad part for we vintage boat fans.....Even with perfectly dry tanks, and a proper additive, E-10 will clog fuel filters because it's alcohol removes accmulated varnish deposits from gasoline on fuel tank walls. This is not just chipping away slowly, it literally just falls off the walls. The deposits clog fuel filters (and Motor Boating recommends having several sets of filters aboard). They claim that "after a couple tanks of E-10m varnish and gum are no longer an issue (This is, of course, if you and your boat survived the onset of sludge).
E-10 can lower a boats operating efficiency by 1 or 2 percent.
In concluding the article, Motor Boating says to keep fuel tanks full, and use a stabilizer that is NOT ethanol based.