If you check the SH4 downloads section, under "graphics mods", on page three I believe, there's a mod by Keldunk which adds exhaust, and improves the appearence of the water flowing from the Limber Holes. I've been useing this for a while now
. As for the flags bit, I have to agree with Steve and the rest of those who prefer not to use them since they were not flown in enemy waters on patrol. Unless a mod can be developed which will allow them to raise/lower, I'll stay flagless.