U-Boat Aces
http://www.uboataces.com/weapon-torpedo.shtml asserts that the captain could make the selection just before firing. Unfortunately they give no actual reference and this is the only place I've ever seen this. It has been my understanding that both mechanisms were always on, so 'Magnetic' is the option to use at all times. When they were ordered to disable the magnetic pistols an actual disassembly of the torpedo head was required, and this took an hour or more for each torpedo. This was certainly the American practice.
Someone once posted a picture of this procedure, but it was a long time ago and I was not in a position to download things at the time, so I don't have a copy.