I play TMO2 now, but played 1.8 for a long time and never had that problem.
Remember, you're shooting at a DD, not sure which one, but most ride high on the water. Even if you set your torps on the lowest setting, say 5ft, early in the war those torps always ran much deeper, usually about 9 ft in game. I agree, your torps are running under, not through.
Duds will hit the ship and bounce off it and just sink. You should get a message dud torpedo. Prematures will just explode in route. Still, early war probably best to set your torps to influence since they will probably run deep.
Next time you shoot, use the external cam and follow the torpedo and you should see it passing under. Try shooting some merchants and you shoudn't have the problem, just don't run torps at the keel line early war.
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