Bleiente; Thanks.. I mean, really, thanks.. for taking the time & energy to post all those pics & point out the installation folder error.
I uninstalled and re-installed, placing it in a folder called SH4 directly under C:\, making sure to install the DirectX 9 during installation.
It worked!
The ocean looks like your pics..
Would love to show how bizarre the ocean I had looked like (used Ctrl+F11 to take some pics), but don't know how to include the .bmp files with this post; I see the "Insert Image" icon above this reply as I'm typing, but when clicked on, I'm directed to provide a URL location of the images (They're on my desktop, not on a web page).
At any rate, I'm one happy camper and can now fully enjoy the game!