it depends, if it is a gas charged shock the ride height will show a little bit at rest. not usually as much as shows in the picture, but 1/2" isn't unusual to see it go down when running good off the shelf shocks.
the biggest thing you can tell when riding is that the car won't get over hitting a bump fora while. just push down on the corner in question, if it keeps bouncing up and down after you let go, it is likely a bad shock.
while riding if you take a corner hard and lean the car onto a bad shock it will sort of dump down fast adn stop abruptly on that corner and then stand up really fast on the spring again when you straighten out.
i used to bust up shocks on my 91 RS when i autocrossed it a lot. it is really obvious in the handling if the shock is totally gone.
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