The colored line is for hydrophone contacts only, radar and visual contacts use the ships icon. To change your visual range look in Data\Library\sensorvisualsub.sim. AI ships use another file, so you don't have to worry about being spotted at 200 nm.
There should be a SensorData controller inside the .sim file, having entries like MaxRange=15000. Change this if you want another maximum visual range.
To open .sim files you can use
Silent 3ditor.
As AgronIsAngry says your visual range is influenced by a number of factors like weather. To change how these factors affect your visual range look in the Data\Cfg\Sensors.cfg file.