The presence of water/hydroxyl on the lunar surface seems to be confirmed. The NASA-built Moon Mineralogy Mapper (M3) detected wavelengths of light reflected off the surface that indicated the chemical bond between hydrogen and oxygen.
Researchers said, one ton of the top layer of the lunar surface would hold about 1 liter of water. It will be a difficult issue to extract the water from the top layer material, but if it succeeds, the extracted water could be used as drinking water and fuel. Fuel for example for a kind of rocket mail, to deliver small hardware from one lunar base to another...

Here is a simple experiment everybody can retry:

Video at youtube: http://www.youtube.com/watch?v=ytBtRiDPNB0