Built a level sensor for a friend's aquarium a couple of years ago. Took a small plastic ball (say 1/2 red, 1/2 white for arguments sake), weighted down 1/2 a bit so that end would stay in down in water, put a small piece of tin foil on the top end, then hung a small chunk of copper over the side, under 'tension'. I used the ball so the 'electrical bits' wouldn't get submerged and mess with his fish. Water level would drop, alarm would sound when the connection was broken. Since I was using a PIC, I set it up so it would only check once every minute or so instead of a continuous current flow. Once the alarm was tripped, then it would go continuously.

Or you could treat the water as the dielectric of a capacitor or a variable resistor, put 2 'probes' in there and use ADCIN or POT to check the resistance/voltage across the probes, looking for a major change.

Or a float and a lever switch, or an IR LED/detector pair, or, or, or, or...

A thousand different ways of doing it...