I think both checking and unchecking the "No map update" is too extreme.
Neither is really realistic. I've tinkered with it checked, and didn't like it but I think I need to get manual targeting down more before I try that option again. But you're right, it is not very realistic-you will have a plotting team/navigator or someone plotting your target. The captain will not be running back and forth and drawing the marks on the map.
Unchecking the box gives way too much information. God's eye view is pretty descriptive.
I currently leave it unchecked. It seems a little less frustrating at this time. I may try it again in the future with it checked as I am improving my manual targeting and am ready for the next step.
I think in OLC's GUI mod, he addresses that issue and has a pretty good solution-targets are visible when zoomed out for some situational awareness, but targets dissapear when zoomed in-you have to plot them yourself. Although I only played around a little with his mod, it is not perfect, but a pretty good solution.
I haven't tried the assisted plotting so I don't have any opinion on that.
My big hope is that SH5 will come up with something that will be better.