[CanuckBoat]

Hitman is 100% correct. I wanted to add a few things that would further clarify things (which I found out after some meditative thinking after playing SHIII):

a) The TDC's role is to provide a firing solution given the inputs of target AOB, bearing, speed and range (though range seems to play less on an impact). THe additional input required is the torpedo SPEED.

b) The firing solution provided by the TDC comes in the form of a single number: GYRO ANGLE. The GYRO ANGLE is the angle on which the torpedo has to turn after you fire at this very second in order to impact an object at the specified bearing if the assumption that AOB, speed and range of the target does NOT change between the time you enter those inputs and the impact point. In essence, the TDC almost always (see point f) below for the exception) calculates the "LEAD" that you require to hit every target.

c) In order to make sure that assumption in b) holds true, we must not do things that will alert the target so that he/she will change any of those inputs (speed, course (which changes AOB)). Things like moving forward very fast towards the enemy after firing, using steam torpedoes in the daytime (which alerts the enemy of the attack and they will alter course to dodge), etc. all help to violate the assumption in b) which leads to a miss. The CLOSER you are to your target when you fire, it is more difficult for the target to change course enough to violate assumption b) which means you can still hit the target.

d) The "update" feature in the TDC was a source of confusion for me earlier. I finally figured it out. What you enter into the TDC if you use the notepad or if you switch the update feature to "0" is the CURRENT AOB of the target at that bearing. When you turn on the update feature (switch it to "1"), the TDC will recalculate the AOB based on the bearing from the periscope or UZO. For example if you look at at ship at bearing 0 from you and you determine that the AOB is 90 degrees to its starboard. You enter this into the TDC using the notepad or with update feature to "0". Then you turn on the update feature. When the target gets to bearing 45 degrees, the AOB should be 135 degrees to its starboard. Turn your periscope to bearing 45 and you will see that AOB on the TDC will be 135 degrees to its starboard REGARDLESS whether or not the target is there. This update of the AOB by the TDC is based on the assumption that the target does not change its course (the target can change its speed, in this case and the AOB calulated by the TDC in this case is still correct).

e) The higher the Gyro angle when you fire, the more likely you will miss. This is because the torpedo has to execute a turn and you are introducing another variable that could go wrong into the whole situation. To circumvent this, I use whatever method is appropriate for me to get the inputs into the TDC (AOB, speed, range). I then specify the type of torpedo setting (speed, pistol, spread if applicable). Then I turn on update feature on the TDC (turn the dial towards "1", insteadof "0"). I turn my periscope or UZO until the gyro angle reads 0. I confirm that the enemy is actually heading towards my crosshairs. I open my torpedo tubes. I take a quick stadimeter reading or update the range from the watch officer. I update the range in the TDC. When the juicy part of the ship touches my crosshair, CTRL-ENTER = LOS=FIRE!. The next part depends if there are warships present and if I am feeling lucky / daring. If there are no warships present or if I am feeling lucky, I will rotate my periscope/UZO towards bearing 0. Why 0? that's because at gyro angle 0, the torpedo is leaving the tube and travelling straight. I look at the stopwatch. If all my estimates are correct, the spot on the ship that I want to hit will touch my crosshairs at bearing 0 when the stopwatch hits the red part. Enjoy the fireworks.
What I just described for GYRO ANGLE 0 is ALWAYS what you should strive for. If you miss, it is with errors with speed and most likely AOB as well.

f) you can turn your torpedoes into point and shoot devices. To do this, just enter a speed of 0 knots into the TDC. This means that whatever bearing you point at, the TDC will give you the SAME GYRO ANGLE. This setting of point and shoot is useful in situations where you can eyeball a shot and/or do not have time to estimate all the parameters (AOB, speed, range) needed by the TDC. It is also useful in a common tactical situation of you being BEHIND/INFRONT of the target and the target is moving directly AWAY/TOWARDS you. Fire a torpedo with magnetic setting and you should be able to hit the target.