Hi Troutish,
No nothing to do with contacts displayed on map.
Difficulty settings you're talking about are AI reaction related only.
To get rid of map contacts, or you check this option in game option tab, or you desable visual/hydro/radar contacts in TAI/nav map options, or you use TDW add-on mods to tweek them as you desire...
Difficulty settings you're refering can be lowered a bit. Because ennemy AI destroyers are way too accurate imo, and by this way unbeatable and unescapable (don't even know if those are english words
)
I found my below settings more playable (furthermore at war begining):
################## Difficulty parameters ###########
# Note: difficulty is in range 0.0 - 1.0 with 0.0 being no difficulty (sensor doesn't exist)
# for non-merchants
VISUAL_DIFFICULTY_MIN = 0.85;
VISUAL_DIFFICULTY_MAX = 1.0;
HYDROPHONE_DIFFICULTY_MIN = 0.60;
HYDROPHONE_DIFFICULTY_MAX = 0.85;
RADAR_DIFFICULTY_MIN = 0.85;
RADAR_DIFFICULTY_MAX = 1.0;
SONAR_DIFFICULTY_MIN = 0.60;
SONAR_DIFFICULTY_MAX = 0.85;