Hi stljeffbb1,
I can only comment on my experience, but I'm running at 73% realism for the moment and I believe there is the option for having dud torpedos and I don't use the stabilization on the scope. I'm also using RUb and visibility mod by Jungman and Ortega along with the usual stuff, HT mod, Improved Convoys, etc..
I would say I get maybe 1 in 4 torpedos exploding prematurely or not detonating at all when they hit the target. That is why they recommend a spread of torpedos instead of trying for a one hit kill (much more realistic and less tonnage to bag per patrol). I've also seen them bounce off the side of the ship. It is especially bad in heavy seas where I do have to run them a little deeper than normal to get the torpedo to reach 1500-2500+m to have a chance to hit the target. And if you play by using contact detonators only early on I still get a few duds. I've also been chased by my own accoustical torps later on in the war and have to dive deep to avoid becoming a kill myself.
As far as engine damage, it would be nice if the CE did report problems with the engines that weren't repairable at sea and you have to limp home and pray you make it without them giving out altogether. The only thing I see happen is that if I get DC'd real bad, I won't get full speed out of my engines but they seem to repair themselves over time and I regain full power from them again for the trip home. But that performance could also be influenced by the fatigue factor in RUb.
So I don't have the problems you do and I don't know if some other mods are responsible for me getting the dud rate I get but I feel I get a rather realistic torpedo performance as noted to history. I don't get one hit kills all the time and certain ships as we all know are bastards to sink with just one torpedo. I know some mods, maybe RUb, increased the strength of ships to make it harder to sink them so that adds to having me use more than one torpedo to sink anything bigger than the small coastal crafts.
I hope you get other feedback that might help you find the realism you're looking for, but this is just my own experience and currently I'm in a Type IXD in the middle of '44 but I did hang on to the Type II and did about a dozen patrols before switching to a Type VIIC.
Good luck
