They were a success! 1806:
Francois Isaac de Rivaz (born in Paris, December 19, 1752; Died in Sion, July 30, 1828) was a Swiss inventor, credited with inventing and constructing the first successful internal combustion engine in 1806. The engine was powered by a mixture of hydrogen and oxygen. The hydrogen gas was contained in a balloon and the ignition was an electrical Volta starter. A year later, Francois Isaac de Rivaz built one of the first automobiles – of course, powered by his new engine.
NOTE: Gasoline was not used for internal combustion engines until 1870.
https://fuel-efficient-vehicles.org/energy-news/?page_id=819
Video of a water powered car from 1974 https://www.bitchute.com/video/VTbTVVWbwMuq/
Correct. The main issue is the fact that, within the H2O molecule, the oxygen shares electrons with the hydrogen atoms. In order to split them, you need to supply an electron to each of the hydrogen atoms... Thus Faraday's Law.
That being said, I won't discount alternative methods of producing hydrogen, but electrolyzing water would not be it.