Just install the game outside of the Program Files folder or you'll get mad trying to mod files or even add missions to the scenario folder. Windows Vista and 7 tries to prevent file manipulation in there. I can't remember requiring compatibility mode.
Definately requires the latest patch.
As for mods there's not many, or atleast, I only have experience with LWAMI and some audio file swaps. Check
http://www.subguru.com/downloads.html, or the Commanders Academy and Dive Center:
http://www.commanders-academy.com/wi..._Waters_-_Wiki