Maybe you need to give it little more time? After a torpedo-impact (if the ship isn't immediately destroyed by a hit in the fuel bunkers) it can take a few minutes or even hours for the ship to fill with water and eventually sink.
Most of the time, 2-3 torpedoes are all you need to sink the early big cargo's, so don't waste more than 2 on a medium cargo.
There's a thread somewhere discussing the weak points of military and merchant ships. There's also a pdf-file displaying those weak points.
I'll try to find the link.
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"If it's me, it would be a waste not to dance no matter what."
"Waiting and having faith is also a captain's duty."
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