The 'No damn bubbles' mod is to remove the speech bubbles that appear over the heads of the interactive crew in the stock game, nothing to do with the bubbles on the exterior of the uboat.
It's always a good idea to read the documentation.
For what it's worth, I'm playing TWoS now and I don't have any bubbles either, although I rarely use exterior views anyway, other than for screenshots so it's not a big issue for me. I know that effects like bubbles, oil etc are tied into zones on the uboat so they may have been left out by any number of mods included in TWoS, possibly FX Update, Dynamic Environment or even the underwater effects could have overwritten the bubbles effect. Hard to pinpoint given the amount of mods in the package.