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I thought flooded cars were written off fully and marked never to be returned to the road.
I remember an issue where some flooded and written off cars were found to be re-registered. I think it was only picked up after one owner had lots of electrical issues and its history came to light.
Probably worse because somehow a big company sold it.
Cat D is nothing to worry about, give it a good check over with someone who knows about cars and haggle a bit more off the price. A car can be written off for a lot less than a new engine. Insurers take more than the cost to repair into consideration when writing of a vehicle. It can take weeks or even months to get a car back on the road, hire cars for the insured party can add considerably to the claim. They make a quick decision to write it off then sell it as salvage and get a good bit of the money back, making it more viable for them to write it off rather than repair.
CAT D can be very minor damage indeed. I've seen a car written off before a couple of panels were keyed. The respray cost was a certain percentage of the car value.
Flog it on ebay if it has some tax/test. As above you should see ~£300 for it.