You don't have to edit any cfg files to get it to work in widescreen. Your mod is most likely installed in the wrong place.
Your MODS folder, jsgme.exe and jsgme.ini should be in the SH3 root folder in your steamapps folder. Then inside your MODS folder should be a folder for the widescreen mod, and inside that one, you should have a Data folder and some other files including a dll and some configuration files.
Then enable the mod in JSGME. That's all you need to do.
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