Because Salix — now more commonly known as Lasix — is a powerful diuretic when administered to a horse it causes the kidneys to increase urine production over and above the normal limit.
As a result water is removed from the blood, not only in the lungs but also throughout the body.
This reduces the volume of plasma (i.e. the liquid component of the blood that the red blood cells are suspended in) which in turn increases urine excretion, promotes dehydration, weight loss and electrolyte imbalances.
How it helps counteract bleeding is by lowering blood pressure especially in the aorta and pulmonary artery which diminishes the problem of EIPH (Exercise-Induced Pulmonary Hemorrhage)  and returns performance to typical levels. 
It is well known that due to the strenuous nature of the exercise involved in horse racing where Thoroughbreds can reach speeds of over 40 mph over the duration of 2 minutes or more, a majority of race horses will to some extent show bleeding in the lungs.
Also known as Simple EIPH, the root cause of this acute, rather than chronic, problem is due to ruptured lung capillaries that release blood into the air passages of the lungs.
Accordingly the air passageways can become obstructed which causes labored breathing and thus difficulty in running. 
Because Salix prevents such bleeding in the lungs, it is arguably a performance enhancing drug. For this reason most trainers perceive this drug as adding a competitive advantage especially given that others on the same playing field use it on a regular basis.
Moreover, since every horse will almost certainly have some blood in their lungs post-race, all one has to do is simply have their horse 'scoped' for the detection of blood and they will be put on an EIPH racing list.  Problem solved.
There is, however, a darker side to the use of Salix that has no appreciation for the well being of the horse.
A powerful diuretic that can flush out upwards of 2% of a horse’s weight in water, the use of Salix can result in the loss of excess potassium and magnesium upsetting the normal electrolyte balance which can bring about an irregular heartbeat and sudden death.
Even low doses of the drug in a dehydrated horse can cause "thickened blood" or circulatory collapse, usually as a result of blood pressure dropping too low.
Furthermore the loss of such large volumes of water (up to several gallons) can confer a weight advantage of as many as 20 pounds or more.
Given that the typical imposts  carried by different horses as a handicapping tactic only vary between 5 to 10 pounds, the loss of 20 pounds is indeed significant. 
While this in itself is shameless deceit, the excessive urination also has the ability to flush out trace amounts of illicit drugs to the extent that on post-race testing, they go undetected — a two-fold effect on achieving performance advantage.
What is even more contemptible is that there is literature to suggest that Salix is relatively ineffective at preventing EIPH, the very condition it is meant to control. 
In any case it seems that this is transparently apparent to some simply through observation.
"It can't be a coincidence that the introduction of Lasix came at precisely the time a trend began whereby horses make fewer and fewer starts each year. It appears that Lasix has done the exact opposite of what its proponents said it would do, which, if you think about it, makes perfect sense. Horses that have to rely on a drug to get through their race day don't figure to last as long as the ones that gets by on mere hay, oats and water.
"So, it appears that Lasix doesn't solve bleeding or keep horses in training longer. Then what does it do? According to the World Anti-Doping Agency, it masks other drugs. That's why it is on its list of banned drugs, which means athletes competing in the Olympics are not permitted to use it.
"Lasix is a fraud. There is strong evidence that it is detrimental to the long-term well-being of the horse and some of the world's most respected scientists say it can mask other drugs. Its pervasive use adds to racing's image as an outlaw sport where drug use is rampant. Besides Canada, no other country in the world allows it. Yet, its usage here is out of control and no one seems to want to do anything about it. That needs to change." 
Another unclassified "treatment" to enhance performance is the Milkshake — a concoction of baking soda, sugar and other additives — and has been used by trainers for many years.
Still prevalent in racing today "stomach drenching" is close to an undetectable way to boost a horse's performance as it is not prohibited and bicarbonates are produced naturally in the body.
The method of administration consists of intubation through the nostril of a horse whereby the mixture is poured through the nose and down the throat. This is to ensure that every ounce of the solution reaches the stomach.
It is widely believed that the elevation in the pH of the blood caused by these alkalizing agents lowers the deleterious effects of lactic acid produced in muscles during exertion or high speed performance.
Studies have indicated that high concentrations of lactic acid in the blood and muscle are correlated with fatigue. 
In effect the buffering ability of the bicarbonate counteracts the effect of the lactic acid by preventing the decrease in pH. This is nothing more than calculated manipulation of the horse’s metabolism.
Apart from the obvious discomfort to the horse, there are other more serious side effects.
As a result of delaying the onset of fatigue, some horses require long periods of time to recover from this practice while others never do and their racing careers are cut short. 
More disturbingly if the procedure is performed incorrectly it can puncture a lung and the horse will die by drowning.
There is also concern that Milkshakes have the ability to mask other drugs. In theory the administration of alkalizing drugs can affect the excretion of other drugs.
"Drugs that are of a basic nature might be excreted in lower concentrations and for a longer duration, while those that are more acidic could be excreted more rapidly. One study showed significant increases in water consumption two hours after dosing and a threefold increase in urine production for 18 hours following the administration of 250 grams of sodium bicarbonate. Sodium bicarbonate administration also will acutely increase sodium and bicarbonate output in the urine sample. This masking effect seems to be most effective for drugs such as lidocaine, procaine, and cocaine." 
Note the mention of the drugs "lidocaine, procaine, and cocaine". All are Class 1 medications — powerful performance enhancers — that carry with them stringent penalties and imminent harm to the horse.
What’s more, it has been postulated that DMSO (Dimethyl Sulfoxide), an analgesic only allowed in threshold values through topical application, has been administered orally by incorporation into Milkshakes to provide pain relief and therefore prolong the onset of fatigue even further. 
One must sympathize with these exhausted injured Thoroughbreds, the majority of them still youngsters, run into the ground on their last legs, metaphorically speaking, as in a dilapidated old car.
 Exercise-Induced Pulmonary Hemorrhage (EIPH) refers to bleeding from blood vessels within the lung (pulmonary) which occurs during strenuous exercise (see http://www.eiph.org/).
 The weight carried by a horse as a handicap.
Part 1: Introduction | Part 2: Historical Aspects | Part 3: The Inception of Drug Testing | Part 4: Drugs and Their Actions | Part 5: Policies and Tactics | Part 6: Class 3 Drugs — Performance Enhancing or Not? | Part 7: Class 4 Drugs — Harmless Therapeutics? | Part 8: The Unclassifieds | Part 9: The Call for Reform | Part 10: Who Rules?