When a recipe calls for a can of condensed soup, is the water implied? There are many recipes that will use a can of cream of mushroom soup, for example, not as soup, but as flavoring or sauce.  

When this is the case, and the recipe does not mention the "add water" step, is it implied?  Is it just expected to add water to condensed soup, or in the context of an ingredient, is the condensed soup used for more flavor and shouldn't be diluted?
In casseroles, pot pies and the like, condensed soup is usually added without additional water. It serves as a thickening agent and will pick up sufficient water from whatever vegetables etc. you also have in the recipe. 
That's not to say you never add water along w the soup, it's just that the desired end result is more often some sort of solid casserole-like dish than merely a souped up soup. If you've uncooked, dry, noodles in there too, you will have to add some liquid beyond the condensed soup, so as to allow them to hydrate properly.