Hi, I started playing SH4 about 2 years ago and had the same problem. Couldn't hit an island with a full torp spread! Now I'm almost ready for trying out manual targeting in the game.
Here is what I do using auto targeting.
1. When lining up any ship try to get a bow angle of no less than 40 degrees on the ship that your trying to sink. Reason being the more toward 90 degrees or (what is called crossing the T) the less chance the torp will deflect off the hull (good when using early torps 1941 and 1942 type).
2. Close with in a good firing range; Even though your using automatic targeting I sitll use the Sonar to TDC range reason being that Radar doesn't pick up most targets untill your at around 12 to 10 miles. If you ping at 3 minute time space you can get a rough estmate of there speed, and you will have the range also. (1st ping write down the range, wait 3 minutes, 2nd ping write down the range, subtract 1st ping from 2nd ping and you end up with the distance the target travled in that 3 minute time.) There is a map mod that has a time, speed, and distance calaculator I use to get there rough speed. I found that all parts of the ocean have what is called a thermal layer, you can use that to run at FULL or even FLANK speed to close the range. The when your within say 2000 to 1500 yards pop up to 60 feet and fire your torp.
3. Alway open the doors first the time lag will throw you shoot off.
4. Check that the torp your firing speed is set to fast. I use both fues depending on the range and type of ship I'm trying to sink.
5. When trying to sink 2 ships at almost the same time fire on the one that is second (or farther in distance) you can use that extra time to line up on the closer ship. When your torps hit the first ship the second ship will not have the time to turn away from you shot (your torps are already on the way)
In Closing; Remember AoB (Angle of Bow) is the most important aspect of you firing soultion. Then its distance, to get in close you use stelth. Open the doors early so not to forget. Once you have knock down some ships you can start messing with spread and time lag.
Hope this helps
Ewall007