You could be smelling other combustion byproducts, while you aren't smelling the CO, if there's combustion gases you can smell, and the CO alarm is going off, there could be CO in the mix. As others have stated there are other things that can set off a CO alarm, but if it's only going off when you run the water heater on propane, apparently there's some kind of issue that needs to be resolved. I work for an HVAC company, years ago we had a customer call in stating her new furnace was setting off her CO alarm. Funny thing was it was 75 degrees outside, I asked her if she 1. Had the furnace on, and 2 were her windows open. She answered that the furnace wasn't on, all the windows were open because they were painting the interior of the house.. End of problem.