You have to select the actual sailor first (when you select the medal, it will highlight the eligible recipients in blue), then drag the medal over to the sailor info, approximately where the medal will go. It will ask you if you're sure, just say yes.
EDIT: And you don't have to bring the boat right to the dock; just within a certain distance (I think it is 30km, but not sure). Me, I just hit Esc and "exit patrol" when I'm done. So I forfeit a little of the possible renown; so be it.
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