As far as I know, and I could be wrong, but sub diesels didnt generate a lot of smoke. A thread on here some months back covered the subject, I have no idea how to find it though but I'm sure it was more a feint blue-ish cloud that dissipated fairly quickly.
The mod doesnt affect your ability to be spotted as far as I know. Its just a cosmetic thing, but well worth using for the eye-candy aspect
A boat running with a Schnorkel is more likely to be found by its wake or just the Schnorkel sticking out of the water anyway. Late radar could detect a scope sticking out the water.
I could be incorrect though but I'm sure someone will come along with actual facts at some point.
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Formerly of U-13, 1st Flot. Back in the days of the WPL and SH2.
Current career : OberLeutnant z. S. Werner Faust of U-707 (Type VIIC) 13th Flot. St. Nazaire.
U-707 Patrol Logs at
http://grimnigel.blogspot.com/