1st – check what kind of lithium battery it is and try to find manufacturer specs. That’s the best way to find out, how particular battery should behave about voltage limits, current, internal resistance etc.
Then – try to measure (if you have tools or know how to do) voltage, resistance and performance. Compare these values with manufacturer specs. Match it? Or it is far away? Simple as that.
If you measuring match more or less what manufacturer saying, it should be ok.
If not – well, probably it is safer to discard such battery. No worth for risk fire or anything such.
If manufacturer data are not available, then try to find out what kind of lithium battery (cell) it is and upon that measure it. There are many different types ( 3 most common lithium rechargeable batteries are>> li-ion with nominal voltage 3.6V, lifepo4 with 3.2V, LTO with 2.4V etc.)
The most easier way how to find whether lithium battery is not good, is charge it to full SoC (near 100%) and then measure voltage drop when discharge.
Example: 18650 cell with rated capacity 2600mAh have nominal voltage 3.6V, full charge 4.2V and cut-off discharge limit 2.75V. Charge to somewhere around 4.1–4.2V and then start discharge with 1A current. In that moment measure voltage drop. It should not go below 4V at all. If it going much below, like 3.9, 3.8 or lower, the cell is very old and ready to bin.
Also, if such cell (as mentioned above) heating too much when charging/discharging by 1A, it is again not safe to use it anymore and better to discard it.
Also self-discharge speed can tell you, whether cell is good or bad. Charge it fully and place somewhere safely. Read voltage after few hours. note it. After one month (or even two), measure voltage again. Should not be different from first measure more than 10% of total value. If it’s more, cell is poor/bad.