Just to bring closure to this thread.
It turned out to be a registry issue.
Backup files first and create a system restore point just in case
Un-install SH3
Go through the registry using regedit and searching for keyword "silent hunter" and deleting any and all items found.
Re-install SH3 and apply the proper patch. Run the game and enter your key code (note if it does not ask for the key code you did not get all the registry entrys).
Exit the game and then you may apply any mods you desire.
Beware of using "Ubisoft" as the keyword search if your like me and have more than one Ubi product on your machine.
Also if you have an install for Silent Hunter 2 for some reason take care to not delete those keys.