Is The Periscope Useless On Elite Difficulty?
 

A ship can be right in front of me, and unless have them as a ESM or classify the signature I can't see them. All of a sudden they popup in front of me.

Might be a stupid question, but are you looking at them through the periscope or just raising it?
If it's the latter, just raising the periscope won't reveal any units. You have to find them in periscope (P key) and use laser-designator (I key).

Looking through the periscope, and it gets really weird sometimes I can see them and their really far. But sometimes I cant see something that's not right in front of me. Im not sure if thats a bug or apart of the difficulty setting

Actually, seems more like a bug to me. AFAIK difficulty settings does not affect visibility through periscope.

If you have the Hide low SOL contacts in 3D option on, you won't see contacts in the 3D view unless you have an accurate firing solution on them.

I'm guessing what you're experiencing is a combination of that and not using the periscope's laser designation function (I).

If that's the case, the devs should still probably look into the matter and allow all contacts to be seen through the periscope: I don't think it's a good idea to have anything artificially hidden from your only "legitimate" visual sensor.

We already do that. In fact I just played on Elite and didn't see this issue.

I've gotten used to spamming "i" while moving the periscope along the bearing the contact is on and once it's spotted, it suddenly pops into view. I would say it's not intended to be that way.