A successful torpedo hit is not a guarantee that the ship will sink. Even Kretschmer was many times very pissed that he needed to spend several torpedoes on a single ship to make her sunk. So its normal.
To have acces to better equipement you have to earn the right and buy them with renown points. Or use Stoian's mod that will remove the cost for these upgrades.
To promote the crew, hit G and then click on their portraits. There you can manage their skill points and medals.. if any.
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