1st off you need to get patch 1.4b. That is the last patch and makes SHIII fully playable. It includes the previous patches, so it's all you need. You can get it there...
http://patches.ubi.com/silent_hunter_3/. US 1.4b is tha last one at the bottom of the page.
As for camo being turned on, I've never heard of that...maybe someone else knows more about it.