I think prior damage reports can hurt just as much as they can help you. Most of the time, you will be evaluating a pretty dirty vehicle, which is going to cover up many defects. I'll quickly glance over the vehicle for glaring damages, which they almost always already know about, but I don't try to list all the damages and have them sign it. Just a hypothetical senario...customer brings a car in that's fairly dirty inside and out, and you walk the car with the customer to note any prior damage. You mark down what you find and the customer signs it. Now after cleaning the vehicle, you notice numerous dents or scratches, and a rip in the upholstery that you didn't see before( or mark down with customer) because the vehicle was dirty, but that you also know had to be there prior to working on the vehicle. Customer comes back, sees the other damages and because they were not included in your signed damage sheet, try to say that you're at fault.
When a customer inquires about a defect on their car after it has been detailed, this is what I tell them, " Yes, I noticed that before/after I washed your car. I went over that area several times, but that is about the best I'm going to be able to get it." Or for dents I'll tell them, " I noticed a few dings on your car after washing it (and will point out the dents). I have teamed up with a company that handles dent removal, would you like me to have them contact you for a free estimate?"
I have not had anyone try to accuse me of damage to their vehicle. Of course, if something was my fault, I would explain the situation to the client and take every needed to measure to correct the problem.