1.) You can adjust the Mk 14 only based on the range to the target.
The slower setting is for distant targets and the faster setting is for close targets. You should never, never, never, NEVER use the slow speed against a target close enough to use the high speed against, because it will give the target more time to react and avoid the fish.
2.) YES! Torpedoes can not only do that, they can: 1.) hit the target and not do anything, 2.) run too deep and miss under the target, 3.) explode prematurely without making it to the target, and 4.) run in a circle and blow up your sub!
The MK10 on the S-class is less likely to do any of these things. I use them on newer boats as well until late '43 for this reason. You can also do certain things with the Mk14 ('glancing blow' shots, disabling magnetic detonators, setting them for 5 foot run depths, firing them on runs as near as possible to your course) that will mitigate these, but the possibilities are always there.
3.) There is really no 'best' or 'worst' class- they all have unique attributes, some are more challenging than others due to their ranges or smaller torpedo loads, though. For the beginner, choose the submarine at the bottom of the list! This will be the newest and most capable model. The ones above it are older and will present greater challenges as you work oyur way back up the list.
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