Refer to figure.
In light aircraft, the cabin heating is supplied by a basic system whereby outside air enters through a simple inlet, passes through a chamber (shroud) that surrounds the hot engine exhaust, is heated up and channelled in to the cabin. This system works really well as a simple, cheap and effective system. However!

Carbon monoxide is a poisonous gas that is produced through incomplete combustion. Aircraft engines (as well as cars, lorries, and any other internal combustion engine) will produce it, as they are quite inefficient. As long as the exhaust is not damaged, cabin air and exhaust gas will be kept separate. But if the exhaust is damaged and the gas leaks in to the heating shroud, the two will combine and potentially lethal air will enter the cabin.

The most dangerous aspect of carbon monoxide is that it is odourless (no smell), colourless and tasteless - you can only detect it with a carbon monoxide detector, you cannot see it or smell it. Exhaust gas temperature does not indicate carbon monoxide. However if you can smell exhaust fumes, you know that they are entering the cabin, and you know that they will contain carbon monoxide, so you should suspect that you will be suffering from carbon monoxide poisoning.