DrBackJack;
are you using the Attack Scope or the Observation Scope? It's been noted that the Observation Scope does not rise to the same height as the Attack Scope so you have to bring the sub up a bit more than usual otherwise you're view will be obscured by the water.
The red line on your depth gauge is periscope depth but that is for the Attack Scope not the Observation Scope ('O' key to activate the Observation Scope, if memory serves).
Having said that, if you are in less than calm seas your periscope view regardless of which one you are using, will be obscured by wave action etc. The only way around that is to bring the sub up a bit so your scope clears the waves. Be warned; if you do that your conning tower may breach the surface if the seas are rough enough.
