Ok Folks searchlights were used routinely by Subs. They allowed for communication with surface vessels and aircraft via morse. They were fitted with colored filters to again indicate and signal.
They were seldom if ever used to designate or locate a target vessel. They were used to signal and IFF as well as provide a means of guiding a rubber raft, etc.
All these uses were of course carefully thought out and controlled in order to not endanger the vessel.
They were very useful and a part of the ships equipment.
Starshells were also used but mostly with handheld 25mm shells, again for the purpose of signalling and IFF. A larger starshell cannon fired over a target into the air beyond could provide a silouette for targeting and identification. Very hazardous technique but employed effectively by U Boats. In an era were radar was new and unreliable, boats were fitted with night optics (larger aperatures) in the observation scopes and in handheld binoculars. Enhancing visibility with a starshell heaved above and beyond a target was a godsend to those attempting to engage at night. Of course lighting up the sky worked both ways and the glitter of white phospher aided DD's and gun crews in finding the subs periscope. Glints off the optics were dead giveaways and the bane of sub skippers..
Japanese subs were fitted with an effective countermeasure. It consisted of a weighted bamboo periscope dummy that was deployed and attracted a DD into a run. These decoys were employed to bait and attact a DD into a run that would provide a Sub sitting silently a target they could predict a bearing on.
The last thing a lookout might see is the bamboo persicope being run over as a torpedoe cuts through the water into the DD's side...
A DD commander may well have wondered how he was sunk..