I sank a Greek small merchant yesterday with 1 torpedo. It was unarmed & appeared to be sailing alone so I had intended to destroy it with the deck gun. However when I got to about 1500m not 1 but 2 destroyers suddenly showed up & started nosing around!
I very quickly submerged & reduced speed to slow to avoid detection. Keeping an eye for our univited guests (the 2 escorts) I waited for the small merchant to settle down (reduce her speed and stop zig-zagging) and launched a T1 set to 8m from about 1600m. The T1 detonated just ahead of her bow & blew a big hole in it. We went down to 102m and went silent. After about 15 minutes (real time) the merchant went down and we slipped away undetected.
According to the GWX manual you should try for waterline & hull hits with the deck gun. They've (the GWX team) reduced the amount of damage that deck hits do.