Smell + fog on windshield are the usual signs of bad news. It's normal for a small amount of coolant/water to evaporate over time, keywords are small and time. Maybe top it off with a few ounces a once or twice a year. You could always borrow/rent a cooling system tester. Hook tester to your system via the cap location on the radiator, pressurize, come back after a period of time and see if it's dropped.
It is possible for the heater core, like the radiator to "rot" but rot probably isn't the best word. Not maintaining good coolant will shorten the life of these two items. The reason is, coolant contains corrosion inhibitors, there is a chemical reaction between these corrosion inhibitors and the engine block/heads; over time the inhibitors are depleted due to the reaction, now there are no corrosion inhibitors, and corrosion begins. The other thing that happens to both heater cores and radiators is that they experience cyclical fatigue due to thermal stress. Every time the vehicle experiences a duty cycle, these items are heated, they grow in size a teeny weenie bit, there's bends and corners that flex and bind, stresses develop. Turn off the key, these operating stresses go away. However, fatigue damage is cumulative, it doesn't go away and over time the part simply wears out due to usage. Such is life. Just for fun, take your DVM, set it on a real low DC voltage setting, put one probe on the vehicle chassis (ground) and stick the other probe into the coolant after you have removed the raditor cap. Surprise, surprise.